The ongoing tension between Hollywood and the AI sector intensified on Wednesday as Disney and Universal filed a copyright infringement lawsuit against Midjourney, a leading AI image generator. The studios claim Midjourney enables users to “blatantly incorporate and copy Disney’s and Universal’s famous characters,” like Shrek and Spider-Man. Disney’s chief legal officer, Horacio Gutierrez, stated, “Piracy is piracy, and the fact that it’s done by an AI company does not make it any less infringing.”
The lawsuit challenges the AI industry’s core belief that it should be permitted to train on copyrighted material under fair use. The outcome of this case could significantly impact both AI and Hollywood.
Ed Newton-Rex, CEO of Fairly Trained, an organization certifying AI models trained on licensed data, believes legal action is the only way to curb the practices of AI companies. He hopes that successful lawsuits will prevent AI companies from exploiting creators’ work.
A growing backlash against AI training norms
AI companies train their models using vast amounts of data collected from the internet. While most companies avoid admitting to scraping copyrighted material, numerous copyright-related lawsuits in the U.S. allege otherwise. Midjourney, which allows millions of users to generate images from prompts, faces a class-action suit led by artists like Kelly McKernan. McKernan discovered users were inputting her name as a keyword in Midjourney to create strikingly similar artworks. McKernan told TIME in 2023, “These companies are profiting wildly off our unpaid labor.”
Hollywood has largely remained on the sidelines for the past few years, while sending mixed signals about AI. During the 2023 contract negotiations, AI was a major sticking point between unions like SAG-AFTRA and producers, who proposed using “digital replicas” to populate film scenes.
While some in Hollywood believe AI will streamline and reduce the cost of filmmaking, many are concerned about the AI industry’s use of copyrighted material. The Disney-Universal lawsuit, the first major lawsuit from Hollywood studios against an AI company, highlights this concern. The lawsuit seeks damages and an injunction to halt Midjourney’s operations, characterizing generative AI theft as a threat to the core incentives of U.S. copyright law.
Midjourney has not yet responded to requests for comment.
Kim Harris, executive vice president and general counsel of NBCU, stated that the action aims to protect the hard work of artists and the significant investment in content.
Newton-Rex emphasizes the lawsuit’s importance due to Disney and Universal’s size, influence, and resources, stating that their involvement makes it harder to ignore the truth.
In February, a Delaware judge weakened the AI industry’s “fair use” argument, ruling that a legal research firm couldn’t copy Thomson Reuters’ content to create a competing AI-based legal platform.
Naeem Talukdar, CEO of AI video startup Moonvalley, believes a similar outcome in the Disney-Universal lawsuit would significantly impact both AI and Hollywood. AI companies might need to retrain their visual models with licensed content. Hollywood, with legal clarity, could increase its use of AI models built on licensed content, such as those by Natasha Lyonne and Bryn Mooser.
Talukdar notes the current reluctance to use these models due to the risk of lawsuits and anticipates a lull followed by a new class of models that compensate creators if the judgment favors copyright holders. This could lead to increased studio adoption of these models.
A governmental loophole?
AI companies are contesting the lawsuits and pursuing policy changes to maintain their training abilities. In January, OpenAI sent a memo to the White House arguing for the necessity of training on copyrighted material. They later eased copyright rules in the name of “creative freedom,” which led to the circulation of Studio Ghibli-style images on social media.
In the U.K., the government planned to allow AI companies access to any copyrighted work unless rights holders explicitly opted out, which faced opposition from figures like Paul McCartney and Dua Lipa. The House of Lords recently rejected the legislation for a fourth time.
Newton-Rex believes the AI and copyright dispute is far from over. He says that AI companies have built their businesses on the idea that they are allowed to use people’s work and build on it to compete with them, and they will not easily give that up. However, he believes the lawsuit is beneficial for creators.