SAN FRANCISCO – Newly unsealed court documents have pulled back the curtain on Project Panama, a secretive, multi-million dollar operation by AI startup Anthropic to acquire and “destructively scan” millions of physical books to train its AI models.
The unredacted files, stemming from a high-profile copyright lawsuit brought by authors and publishers, reveal that Anthropic executives aimed to digitize nearly every book in existence—often by slicing the spines off physical copies to facilitate high-speed scanning.
Inside ‘Project Panama’
According to the filings, Project Panama was launched in early 2024. Internal communications show a company determined to keep the scale and methods of the project hidden from the public.
- The Mission: To build a “central library” of human knowledge that would teach the AI chatbot, Claude, “how to write well” by using refined, long-form text rather than “low-quality internet speak.”
- The Scale: Anthropic estimated there are roughly 130 million unique books in the world. While they didn’t reach that number, they reportedly spent tens of millions of dollars to acquire at least five million books within the first year.
- The Method: The company hired former Google Books executives to lead the effort. They targeted used bookstores (including New York’s famous The Strand), wholesalers like Ingram, and even “chronically underfunded” libraries to buy books in bulk.
- The Settlement: In August 2025, Anthropic agreed to a landmark $1.5 billion settlement with a class of authors—the largest copyright recovery in the AI era.
- The Fair Use Loophole: Curiously, a San Francisco federal court ruled in early 2026 that the act of purchasing a book and digitizing it for internal research (and then destroying the physical copy) could be considered fair use, as it didn’t involve distributing illegal copies. However, the court took a harsher view of the company’s separate use of pirated digital libraries like “Books3.”
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