On June 11, The Walt Disney Company and Universal Pictures filed a federal lawsuit against AI image-generation platform Midjourney in the U.S. District Court Central District of California. Why? The studios allege that Midjourney unlawfully used copyrighted images of well-known characters they own (including Darth Vader, Elsa from Frozen, the Minions, and others) to train its image-generation engine, and that the platform is reproducing these characters without authorization and profiting from the unauthorized distribution of derivative works.

It is a case that could result in a significant development in the ongoing debate over the use of copyrighted content to train artificial intelligence models and whether such use constitutes infringement.

Below, we will take a closer look at the claims being made, what important legal questions are being raised, how the case might play out, and what it all means for the bigger picture of AI and media. 

What the Studios Are Arguing

We touched on the complaints above, but let us break them down in a bit more depth. According to the complaint, Disney and Universal argue that:

1. Midjourney’s training practices involved using protected works without permission, in violation of copyright law.
2. The outputs generated by Midjourney replicate identifiable characters and elements from their films, which the studios view as derivative works that infringe on their intellectual property rights.
3. The company acted willfully, continuing to allow such reproductions after receiving notice from the studios and declining to implement content safeguards or filtering mechanisms.

Seemingly in the studios’ favor is the fact that Midjourney has previously acknowledged that its model was trained by scraping publicly available images from the internet without securing licenses for those images.

However, CEO David Holz has compared the practice to how search engines index content online, suggesting that such use might fall under the doctrine of fair use.

Which brings us to some of the big questions this lawsuit raises.

Key Legal Issues That This Case Should Deal With

From an intellectual property law perspective, this case raises several important questions that the legal profession — and society as a whole — has been wrestling with over the past few years:

• Where is the line between fair use and infringement when training AI models? On June 23,  the U.S. District Court for the Northern District of California issued a ruling on a motion for summary judgment in Bartz v. Anthropic PBC finding that using copyrighted works Anthropic PBC purchased to train large language models is fair use under U.S. Copyright law.  See Bartz v. Anthropic PBC, Case No. 24-cv-5417 (N.D. Cal. June 23, 2025)  They also ruled that using downloaded pirated copies to build Anthropic’s central library was not justified fair use. 

That being said, this was a district court ruling. Any definitive decision on whether training an AI with copyrighted material (without reproducing it verbatim) constitutes infringement will almost certainly go all the way to the U.S. Supreme Court. Because of that, the Disney lawsuit could be another big piece of the puzzle clarifying that issue

• Do AI-generated outputs qualify as derivative works? If a generated image bears a strong resemblance to a copyrighted character, it may be considered a derivative work requiring a license, even if the image was not directly copied.
• What responsibilities do AI developers have once notified of potential infringement? Continued operation without safeguards following formal notice could weaken fair use or safe harbor defenses.

How Might This All Play Out — and What Could It Mean for Generative AI Going Forward?

Big picture? This lawsuit along with other cases that are proceeding through the federal courts could set the tone for how AI-generated content is handled under U.S. copyright law — and it has enormous implications for anyone who creates original work or is trying to create a brand or business.

Because of this, how it might play out is a giant question mark, and this is far from the only case attempting to bring some clarity to the issue of how generative AI can legally be trained and used. The Copyright Office has been releasing guidance on how to handle generative AI in relation to copyright, but so far most of their recommendations concern the extent to which AI-created material can receive copyright protection. 

Short version: it cannot. That being said, it is worth looking into the nuance of what they have said.

With the acknowledgment that the overall outcome of the case is quite hard to predict, how the court reacts to the injunction requested by the studios may tell us a lot — and even on its own could have big ripple effects.

Breaking Down the Injunction Against Midjourney

The studios’ injunction seeks to prevent Midjourney from producing or distributing content that replicates their characters, along with unspecified monetary damages. If granted, the injunction could compel Midjourney to implement stricter controls over its model, such as filtering mechanisms or licensed datasets.

What might this mean for AI companies? The outcome could shape future rules for:

• How AI tools are trained
• Whether businesses need to license content for training
• What kinds of content AI systems can legally generate

In short, this case could have far-reaching implications for the future of AI-generated content. Companies operating in this space should be prepared for increased scrutiny — and potentially, regulatory or judicial action — if they rely on copyrighted works without authorization.

Why All Business Owners and Creators Should Care

Any online work can end up as part of a generative AI’s dataset unless you have taken steps to block it. If this happens, you might start seeing images, logos, or written content that closely resemble your own — something that could undermine your brand. 

What can you do? Here are a few proactive steps to consider:

• Audit your content. See where your brand, images, or writing are being used online.
• Use copyright protection tools. Platforms like Google and others allow you to request content removal if it violates your rights.
• Consider registration. Registering your copyrights and trademarks strengthens your ability to enforce them.
• Talk to an attorney. Whether you’re concerned about your work being copied by AI or if you want to use AI safely in your own business, get legal advice early.

You do not have to sit on the sidelines. Understanding your rights is the first step in protecting your brand in the digital age. Want some personalized advice? Get in touch.