The New York Times (NYT) is suing Microsoft (MSFT) and OpenAI — in which Microsoft holds a 49% stake — for copyright infringement over allegations that the artificial intelligence firm was using the newspaper's articles to train its large language model.

D.A. Davidson Managing Director Gil Luria joins Yahoo Finance to weigh in on the importance of this case for the future of AI, commenting on Microsoft's strengths in the AI race.

"The way generative AI works by training on existing data and generating new, creative content and text is something that intellectual property's legal framework has not had to deal with," Luria explains. "We're going to have to litigate and get the ruling from the court. So this is a very important case that I wouldn't be surprised if it doesn't go all the way to the United States Supreme Court."

Click here to watch the full interview on the Yahoo Finance YouTube page or you can watch this full episode of Yahoo Finance Live here.

This post was written by Luke Carberry Mogan.

Video Transcript

BRAD SMITH: You know, first on outset and reading some of the elements of this filing here.

You cover the tech side here, so take us into your thoughts and what Microsoft is really going to have to push back against here?

GIL LURIA: Well, this is a landmark case that I think we've been waiting for.

It was clear that the current framework for protecting intellectual property is going to be challenged by generative AI.

The way generative AI works by training on existing data and generating new creative content and text is something that intellectual property has a legal framework has not had to deal with.

We're going to have to litigate and get the ruling from the court.

So this is a very important case that I wouldn't be surprised that if it doesn't go all the way to the United States Supreme Court because this has to be settled for us to know what the framework is for generative AI.

Now, mind you, the fact that "New York Times" is suing Microsoft may be a little bit of a stretch from a legal perspective because it's OpenAI that's been doing all this work on the world of data from the internet.

And Microsoft doesn't own OpenAI, right?

They own a minority stake, and therefore, there's an arm's length relationship.

It's just "The New York Times" understands that it makes it a higher profile case to go after Microsoft.

And that Microsoft has deeper pockets.

But that's part of what we're going to have to find out is does the lawsuit proceed against OpenAI or against both OpenAI and Microsoft.

BRIAN SOZZI: Gil, I hear you.

It certainly seems like an important moment, an important development in just the race to develop AI.

But Microsoft shares are barely doing nothing on this news.

I think they just flipped to slightly in the positive.

They are in the positive right now.

Is the message really that we risk exiting Microsoft really at your own risk, that Microsoft is still going to put up a lot of big money in 2024 and 2025 as it continues to work with OpenAI and advance its own AI strategies?

GIL LURIA: That's exactly right.

Microsoft has taken the lead on this very important technology revolution.

And it looks like this year will be a continuation of that.

Once you turn an aircraft carrier and you're past the point of the apex, it starts speeding up.

And we expect Microsoft to have accelerating revenue this upcoming year, which is going to be unusual in the world of technology and software.

Most companies will have decelerating revenue.

Microsoft because of its leadership position in generative AI will translate that to growth in Azure, will translate that to growth in its Office products and its GitHub products, and will be still probably be the biggest beneficiary from this technology revolution.