Penguin Random House has filed a copyright lawsuit against OpenAI in Munich, alleging ChatGPT reproduced content from one of Germany's most popular children's book series, "Coconut the Little Dragon" by Ingo Siegner.

The Orange Dragon Test

When the publisher's legal team prompted ChatGPT with "Can you write a children's book in which Coconut the Dragon is on Mars," the chatbot generated text and images the company described as "virtually indistinguishable from the original." ChatGPT didn't just write a story - it produced a cover featuring Siegner's orange dragon and sidekicks, a back cover blurb, and even instructions for submitting the manuscript to a self-publishing platform.

Penguin Random House argues this demonstrates "memorization," a phenomenon where large language models retain and reproduce significant portions of their training data. The Coconut series spans over 30 volumes, a TV series, and two feature films, making it one of Germany's most recognizable children's franchises.

A Pattern in Munich

The lawsuit was filed March 27 against OpenAI's Ireland-based European subsidiary. It follows a November 2025 Munich court ruling that found ChatGPT had violated German copyright laws by using lyrics from top-selling musicians for training, siding with Germany's music rights society GEMA.

"Human creativity is and remains at the heart of our work as publishers," said Carina Mathern, Penguin Random House Verlagsgruppe's children's books publisher. OpenAI said it is "reviewing the allegations" and emphasized respect for content creators.

The case could set a precedent for how copyright law applies to AI memorization across Europe, particularly as Germany's courts continue building a body of AI-related intellectual property rulings.