On Wednesday, the long-simmering dispute between Hollywood and the AI industry escalated dramatically when Disney and Universal sued Midjourney, one of the most prominent AI image generators, for copyright infringement. The two Hollywood heavyweight studios argue that Midjourney allows its users to “blatantly incorporate and copy Disney’s and Universal’s famous characters,” such as Shrek and Spider-Man. “Piracy is piracy, and the fact that it’s done by an AI company does not make it any less infringing,” Horacio Gutierrez, Disney’s chief legal officer, said in a general statement.
[time-brightcove not-tgx=”true”]The lawsuit challenges one of the AI industry’s fundamental assumptions: that it should be allowed to train upon copyrighted materials under the principle of fair use. How the case gets resolved could have major implications for both AI and Hollywood going forward.
“I really think the only thing that can stop AI companies doing what they’re doing is the law,” says Ed Newton-Rex, the CEO of nonprofit organization Fairly Trained, which provides certifications for AI models trained on licensed data. “If these lawsuits are successful, that is what will hopefully stop AI companies from exploiting people’s life’s work.”
A growing backlash against AI training norms
AI companies train their models upon vast amounts of data scoured from across the web. While most of these companies have resisted admitting that they scrape copyrighted material, there are already dozens of AI copyright-related lawsuits in the U.S. alone alleging otherwise. Midjourney, which allows its millions of registered users to generate images from prompts, faces a class-action suit led by artists including Kelly McKernan, who found that users were inputting the artist’s name as a keyword in Midjourney to spit out eerily similar artworks. “These companies are profiting wildly off our unpaid labor,” they told TIME in 2023.
For the last few years, Hollywood has refrained from entering the fray, while sending mixed messages about AI. During contract negotiations in 2023, AI was a major source of contention between unions like SAG-AFTRA and producers, who advanced a “groundbreaking AI proposal” involving the use of “digital replicas” to fill out the backgrounds of film scenes.
Read More: Even AI Filmmakers Think Hollywood’s AI Proposal Is Dangerous
But while some in Hollywood hope AI will make filmmaking more efficient and less expensive, many more have grown concerned about the AI industry’s usage of copyrighted material. This concern has come to a head with the Disney-Universal lawsuit, which is the first major lawsuit brought by Hollywood studios against an AI company. The lawsuit seeks damages and an injunction that would immediately stop Midjourney’s operations—and casts generative AI theft as a problem that “threatens to upend the bedrock incentives of U.S. copyright law.”
Midjourney did not immediately respond to a request for comment.
“We are bringing this action today to protect the hard work of all the artists whose work entertains and inspires us and the significant investment we make in our content,” said Kim Harris, executive vice president and general counsel of NBCU.
Newton-Rex believes that this lawsuit is particularly significant because of the size, influence and resources of Disney and Universal. “The more that these mainstays of the American economy weigh into this fight, the harder it is to ignore the simple truth here,” he says.
In February, a Delaware judge dealt a blow to the AI industry’s “fair use” argument, ruling that a legal research firm was not allowed to copy the content of Thomson Reuters to build a competing AI-based legal platform.
If the Disney-Universal lawsuit is similarly successful, that would have major implications for both AI and Hollywood, says Naeem Talukdar, the CEO of the AI video startup Moonvalley. Many AI companies might have to retrain their visual models from the ground up with licensed content. And Hollywood, if given legal clarity, might actually accelerate its usage of AI models built upon licensed content, like ones built by Natasha Lyonne’s and Bryn Mooser’s Asteria Film Co.
“Nobody wants to touch these models with a 10-foot pole, because there’s a sense that you’ll just get sued on the outputs later,” Talukdar says. “I would expect that if this judgment falls a certain way, you’ll see a lull, and then you’ll have a new class of models emerge that pays the creators. And then you’ll see this avalanche of studios that can now actually start using these models much more freely.”
A governmental loophole?
Unsurprisingly, AI companies are fighting back in court. They’re also working on another path forward to retain their ability to train their models as they see fit: through governmental policy. In January, OpenAI sent a memo to the White House arguing their ability to train on copyrighted material should be “preserved.” They then relaxed several rules around copyright in the name of “creative freedom,” which triggered a flood of Studio Ghibli-style images on social media.
In the U.K., the government announced plans to give AI companies access to any copyrighted work that rights holders hadn’t explicitly opted out of, which drew a huge backlash from stars like Paul McCartney and Dua Lipa. Last week, the House of Lords rejected the legislation for a fourth time.
Newton-Rex says that this dispute over AI and copyright will not be resolved any time soon. “Billion-dollar AI companies have staked their entire businesses on the idea that they are allowed to take people’s life’s work and build on it to compete with them. I don’t think they’re easily going to give that up because of one lawsuit,” he says. Nevertheless, he says that the announcement of this lawsuit is “really good for creators everywhere.”
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