A federal court ruling recently confirmed that AI generated content may not be immune from trademark liability. In August 2025, Getty Images filed its complaint against Stability AI in the Northern District of California, alleging that Stability AI unlawfully copied and used millions of Getty images and associated metadata to train and commercialize its AI models. In addition to bringing copyright claims, Getty also brought Lanham Act claims of trademark infringement, false designation of origin, and dilution, alleging that the outputs produced by Stability AI—which may bear distorted versions of the Getty watermark—are likely to cause consumer confusion as to the source of the image. Stability AI moved to dismiss all Lanham Act claims, but on April 23, 2026, the court denied the motion. The court found that Getty’s allegations that Stability AI is a direct competitor, along with reports of users encountering AI generated images bearing distorted Getty watermarks were sufficient to support a reasonable inference of likely consumer confusion. As to false designation of origin, the court concluded that Stability AI's commercially distributed AI generated images constituted “goods” under the Lanham Act, and that the presence of distorted Getty watermarks without attribution to Getty could mislead consumers as to the image’s source or affiliation. The court also allowed Getty's dilution claims to proceed, finding that Getty had sufficiently alleged its marks were “famous” based on decades of nationwide use, extensive advertising and media exposure, and a large global customer base.  Going forward, the case may help define how traditional trademark principles apply to the commercial outputs of generative AI systems, particularly where altered marks appear in the AI generated content.