An Ontario court just released an important decision refusing to dismiss a copyright, unjust enrichment, and breach of contract claims brought by the Toronto Star and other newspaper publishers against OpenAI for lack of jurisdiction. In Toronto Star Newspapers Limited v. OpenAI Inc., 2025 ONSC 6217, Justice Kimmel held that the Ontario court had subject matter jurisdiction over the claims in the proceeding and personal jurisdiction over some of the operating companies of one of the leading U.S. based generative AI companies, OpenAI.
The decision in the case did not resolve the issue as to whether the claims in the action for copyright infringement are within the territorial scope of the Canadian Copyright Act (the “CCA”). Nevertheless, while it is an important decision, some of the reasons given in the decision failed to consider leading cases dealing with jurisdiction calling into question the correctness of some of the court’s findings.
Background to the OpenAI decision
OpenAI defendants, who were sued in an Ontario court, brought a motion asking the court to set aside the claim for lack of subject matter over the dispute and for lack of personal jurisdiction over the OpenAI defendants. In the alternative, they asked the court to stay or dismiss the action on the ground that Ontario is a forum non conveniens.
The court dismissed the claims against four of the OpenAI defendants. But, the court dismissed the motions with respect to six other OpenAI defendants finding both subject matter jurisdiction over the claims and personal jurisdiction over the six OpenAI defendants.
To understand the decision, it is important to know that In legal proceedings there are at least four different types of jurisdiction, subject matter jurisdiction (the jurisdiction of a court to take and resolve a dispute), personal jurisdiction (aka, “territorial jurisdiction”, the jurisdiction of a court over the parties to the dispute), territoriality (whether the claims fall within the territorial jurisdiction of a legislature or the scope of a Parliamentary enactment e.g., the territorial scope of the CCA, often referred to as the “territoriality principle”), and enforcement jurisdiction (whether a court will make orders with extraterritorial effect). While these questions are somewhat related and often apply variants of the “real and substantial connection test”, the analysis for each jurisdictional issue is not the same.
The court in the OpenAI decision, only addressed the issues of subject matter and personal jurisdiction. OpenAI did not rely on any rule of civil procedure that would have expressly asked the court to dismiss the claims against it based on the territoriality principle.
The Subject Matter Jurisdiction Holding
The court held that it is a superior court of general jurisdiction which gives it the authority to adjudicate all manner of claims, unless the jurisdiction has been displaced by legislation, an arbitral, or similar agreement.
OpenAI argued that the court’s subject jurisdiction did not extend to claims outside the territorial scope of the CCA. It contended that the real and substantial connection test formulated by the Supreme Court in SOCAN[i] applied to limit the subject matter jurisdiction of the court. The court did not address this argument. But it did decide that issues concerning the territorial scope of the CCA were not relevant to the court’s subject matter jurisdiction. It made a similar ruling dismissing OpenAI’s arguments that that the claims for breach of contract and unjust enrichment were pre-empted by the CCA on the grounds that those arguments were also irrelevant to subject matter jurisdiction.
The personal jurisdiction holding
The personal jurisdiction ruling purported to adopt the widely used test for assessing whether a court has personal jurisdiction formulated in Club Resorts Ltd. v. Van Breda, 2012 SCC 17. The assessment involves a two-step analysis.
First, as reiterated by the Supreme Cout in Sinclair v. Venezia Turismo, 2025 SCC 27, the plaintiffs must demonstrate that there is some connection between the jurisdiction and the dispute. Four factors that presumptively allow a court to assume jurisdiction over a dispute in tort cases are: 1) the defendant is domiciled or resident in the province; 2) the defendant carries on business in the province; 3) the tort was committed in the province; and 4) a contract connected with the dispute was made in the province. Property located in the province relating to the asserted claims has been recognized as a fifth connecting factor.
Second, the defendants may rebut the presumption by demonstrating that the connection to the court does not point to a real relationship between the dispute and the forum (e.g., it does not amount to a “real and substantial connection”). The assessment of whether a presumption has been rebutted is concerned with the strength of the presumptive connection.
The court in the OpenAI decision found three presumptive connecting factors to apply. First, some of the defendants carried on business in Ontario. Second, some of the OpenAI defendants met the low threshold on the motion (a good arguable case based on pleaded allegations) of infringements committed in Ontario. Third, contracts connected with the dispute were entered into in Ontario.
Carrying on business in Ontario
In concluding that some of the OpenAI defendants carried on business in Ontario the court relied on decisions in the Equustek case.[1] There B.C. courts were found to have personal jurisdiction over Google because key parts of its business were carried out in B.C, even though its servers, staff, and physical facilities were not located in B.C. The courts relied on Google gathering user information through its web crawler “Googlebot” and using that information to sell services to users in B.C. through contracts Google entered into with customers.
The court found that OpenAI carried on business in Ontario relying exclusively on virtual activities such as operating a web crawler and other online search activities that collected data including from at least some Canadian websites, using that content to develop OpenAI’s models, offering services to users in Ontario, advertising, holding trademarks, and contractual arrangements in Ontario.
Infringements of copyright in Canada
The court canvassed whether the alleged copyright infringements occurred in Canada. In finding that this connecting factor was established, the court relied heavily on the Supreme Court decision in SOCAN for the proposition that the territorial jurisdiction of the CCA extended to where Canada is the country of transmission or reception. The court quoted from SOCAN “[i]n terms of the Internet, relevant connecting factors would include the situs of the content provider, the host server, the intermediaries and the end user. The weight to be given to any particular factor will vary with the circumstances and the nature of the dispute.”
Relying on SOCAN, the court identified activities that included various acts of alleged copying from Canadian online locations for use in activities outside of Canada, or other infringements occurring outside of Ontario. Examples, included crawling and scraping from online locations physically located or hosted in Ontario or Canada, transmitting such data to locations outside of Ontario, and using such data to build, train, augment and operate its GPT models including to offer GPT-based products and services to individual consumers and businesses in Canada.
Breach of contract claims
The court found that there was a good arguable case that the publishers’ terms of use were binding and breached by OpenAI by crawling and scraping their websites and making, among other things, commercial uses of content on sites. The court premised its decision on the Century 21 case stating:
In the context of a breach of contract claim related to website scraping, the Supreme Court of British Columbia found these kinds of “browse wrap” agreements enforceable as against the defendants who scraped the website for commercial purposes because the terms were available and those defendants made use of similar terms of use on their own website: see Century 21 Canada Limited Partnership v. Rogers Communications Inc., 2011 BCSC 1196, 338 D.L.R. (4th) 32, at paras. 107-8.
Rebutting the presumption
The court held that OpenAI failed to rebut the presumptions from the above connecting factors. This finding was strongly premised on the reliance on SOCAN.
Ontario is not a Forum Non Conveniens
The court also held that the action should not be stayed as Ontario is not a forum non-conveniens.
Comments on the OpenAI decision
While the decision is an important one, it did not decide any of the substantive issues in the case. In fact, the decision made clear that it did not preclude OpenAI from raising the territorial principle in later proceedings to limit extra-territorial claims that fall outside the scope of the CCA. OpenAI would also not be precluded from contesting whether the breach of contract and unjust enrichment claims are pre-empted as being in conflict with the CCA.
The court’s findings on the carrying on business connecting factor was heavily influenced by purely virtual activities carried on by OpenAI and by the decisions in Equustek. However, the court did not refer to later decisions by the Supreme Court of Canada in Chevron[ii] and H.M.B Holdings[iii] where the court confirmed that carrying on business requires a physical and not merely a virtual presence.
The court’s findings on the infringements in Ontario connecting factor was heavily influenced by its reliance on SOCAN. However, SOCAN applied the real and substantial connection test to the communication to the public right. Later decisions of the Federal Court in Sirius and Maier Estate,[iv] which the court did not refer to, have held that that test does not apply to the reproduction right. These courts have held that the only relevant factor is the location in which copies of a work are fixed into some material form. The locations where source copies reside or acts of copying onto servers located outside of Canada, are not infringements according to those cases.
The court’s finding that OpenAI may have been subject to the publishers’ terms of use was made without any analysis of the general criteria for the enforcement of contracts. In particular, it did not address whether OpenAI was aware of the publishers’ website terms having regard to, for example, the conspicuousness of those terms including to OpenAI’s crawlers, whether the sites used any directives in robots.txt or HTTP response headers to signal that content must not be scraped or used for model training. It also did not analyze how scraping a site using autonomous agents constituted an objective manifestation of acceptance of the website terms, something required for contract formation.[v] In Century 21, the court based its decision by applying to the facts of that case, the ordinary principles of offer and acceptance. According to that Court:
As noted in the authorities referred to above, the law of contract requires that the offer and its terms be brought to the attention of the user, be available for review and be in some manner accepted by the user. Such an analysis turns on the prominence the site gives to the proposed Terms of Use and the notice that the user has respecting what they are agreeing to once they have accepted the offer. To establish a binding contract consideration will also be given to whether the user is an individual consumer or a commercial entity and in addition a one-time user or a frequent user of the site.
The court also did not address other cases that have found browsewrap agreements to be problematic and unenforceable. For example, in 1395804 Ontario Ltd. v. Canada (Attorney General), 2016 FC 1255, the Federal Court declined to enforce a browsewrap agreement in the context of a publisher’s paywalled service stating:
I agree with Mr. Hameed that the deliberate breach of the accepted terms of access to and use of copyrighted material, whether protected by a paywall or not, is a relevant consideration in applying the fair dealing provisions of the Act. However, the owner of copyright must establish that the terms of use actually prohibit the access or distribution in question and that the person involved was aware of the limitations.
It is a simple exercise to bring the stipulated terms of use to the attention of a subscriber to a paywall-protected news service. All that is required is an acknowledgement at the time of acquiring access that the terms in question were read and accepted.
In this case Blacklock’s failed to ensure that its subscribers were aware of the Terms and Conditions it sought to impose…
The requirement for bringing contractual conditions to the attention of a subscriber at the time of purchase is well-known in the law. It is not something that is imposed by bare inference or by falling back on the supposed sophistication of users. At a minimum the party to be bound must be shown to have been aware of the Terms and Conditions at the time of purchase: see Kobelt Manufacturing Co. Ltd. v. Pacific Rim Engineered Products (1987) Ltd., 2011 BCSC 224, 84 B.L.R. (4th) 189, at paragraph 124.
OpenAI is appealing the Ontario court decision. We can therefore expect that the decision will not be the last word on the issues in this case.
Endnotes
[1] Equustek Solutions Inc. v. Jack, 2014 BCSC 1063, aff’d 2015 BCCA 265, aff’d 2017 SCC 34, [2017] 1 S.C.R. 824
[i] Entertainment Software Association v. Society of Composers, Authors and Music Publishers of Canada, 2012 SCC 34
[ii] Chevron Corp. v. Yaiguaje, 2015 SCC 42, [2015] 3 SCR 69
[iii] H.M.B. Holdings Ltd. v. Antigua and Barbuda, 2021 SCC 44
[iv] Sirius Canada Inc. v. CMRRA/SODRAC Inc., 2010 FCA 348, Maier Estate v. Bulger, 2024 FC 1267
[v] See, Owners, Strata Plan LMS 3905 v. Crystal Square Parking Corp., 2020 SCC 29
