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What You Need to Know
Key takeaway #1
State Law Claims Survive Preemption: The Court held that Reddit’s claims for breach of contract, unjust enrichment, trespass to chattels, tortious interference, and unfair competition were not preempted by the Copyright Act.
Key takeaway #2
Broader Impact on AI Industry: This decision signals that preemption arguments may not shield AI companies from state-law claims over the taking and use of online content to train AI models.
Key takeaway #3
Heightened Importance of User Agreements: The court’s findings are largely based on Reddit’s User Agreements and technical safeguards signaling that they can serve as independent grounds for liability.
Last month, in a ruling that may carry significant implications for the artificial intelligence industry, a California federal court held that state tort and contract claims related to the training of AI models were not preempted by federal law and could proceed in state court. Because many AI models were trained in a similar fashion---by scraping data from online posts and repositories---the decision suggests other plaintiffs may bring such claims in state courts, in addition to federal claims of copyright infringement.
Reddit, a network of user-created online communities, sued Anthropic on June 4, 2025 in San Francisco Superior Court based on Anthropic’s alleged scraping of Reddit content to train Anthropic’s Claude AI model. Reddit alleged breach of contract, unjust enrichment, trespass to chattels, tortious interference with contract, and unfair competition.
Within days of the filing, Anthropic removed Reddit’s suit to federal court, claiming that Reddit’s claims were essentially copyright infringement claims, over which federal courts have exclusive jurisdiction. Reddit responded that none of its claims were copyright claims or preempted by the Copyright Act. On March 30, 2026, Judge Trina L. Thompson of the U.S. District Court for the Northern District of California agreed, remanding the case back to California state court.
The Court found that Reddit had alleged violations that “go beyond merely copying Reddit’s content without permission.” The Court explained that “Anthropic allegedly misappropriated Reddit’s content and data for its own use, in violation of contractual rights under Reddit’s User Agreement, which are distinct from rights granted by copyright law.” While finding the content was protected under the Copyright Act, the Court concluded that each claim presented “an extra element” that made the claims “qualitatively different” from a claim of copyright infringement, thus they could proceed.
On Reddit’s breach of contract claim, Judge Thompson held that the Reddit User Agreement’s restriction on scraping data for commercial use was qualitatively different than obligations created by the Copyright Act because the User Agreement imposed obligations that extend beyond the protections afforded by the Copyright Act. On Reddit’s unjust enrichment claims, the Court found that they amounted to more than just accusing Anthropic of profiting from copyrighted content taken from its website without paying for it. She found that Reddit’s unjust enrichment claims were based on allegations that “Anthropic … bypass[ed] technical safeguards, violat[ed] contractual access restrictions, misrepresent[ed] its compliance, and exploit[ed] Reddit’s platform without authorization . . . .” The Court concluded that these alleged facts do not fall within the ambit of the Copyright Act. The Court’s analysis with regard to the trespass to chattels and unfair competition claims was the same.
Finally, with regard to Reddit’s tortious interference with contract claim, the Court held that, under the instant circumstances, the claim was not preempted. The Court recognized that tortious interference claims have been subject to preemption when the allegations reveal that a plaintiff is seeking only to recover for copyright infringement. Here, the Court concluded that the tortious interference claim was not a stalking horse for a copyright claim. Rather, the Court concluded that the rights affected, and that Reddit is seeking to vindicate, were Reddit users’ privacy rights, imposed by contract between Reddit and its users. Because those rights are unrelated to things like distribution and reproduction, they are qualitatively different from rights under the Copyright Act and thus not preempted.
This decision has implications for AI-related litigation. Many of the cases that plaintiffs have brought alleging the improper use of their data for the training of AI models raise claims of copyright infringement. This decision indicates that privacy, contract, tortious interference, and unfair competition claims may also be viable claims, either alongside federal copyright claims or as stand-alone claims in state courts. How these claims will ultimately fare remains to be seen.
Crowell attorneys specializing in privacy, cybersecurity, and technology—including AI—will continue monitoring this case and others like it and will continue to provide updates and insights as this emerging area of law evolves.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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