On Thursday, Disney and OpenAI announced a deal that seemed unthinkable not too long ago. Starting next year, OpenAI will be able to use Disney characters like Mickey Mouse, Ariel and Yoda in its Sora video generation model. Disney will take a $1 billion stake in OpenAI, and its employees will gain access to the company's APIs and ChatGPT. None of this makes sense unless Disney was fighting a battle it couldn't win.
Disney has always been a notoriously aggressive litigant around its intellectual property. Along with fellow IP powerhouse Universal, it sued Midjourney in June for productions that allegedly infringed on classic film and TV characters. The night before the OpenAI deal was announced, Disney reportedly sent a cease-and-desist letter to Google claiming copyright infringement on a “massive scale.”
At first glance, there seems to be some dissonance with Disney embracing OpenAI while poking at its rivals. But it's more than likely that Hollywood will follow a similar path to media publishers when it comes to AI, signing licensing deals where it can and pursuing lawsuits when it can't. (WIRED is owned by Condé Nast, which struck a deal with OpenAI in August 2024.)
“I think AI companies and copyright holders are beginning to understand and come to terms with the fact that neither side is going to have an absolute victory,” said Matthew Sag, a professor of law and artificial intelligence at Emory University. While many of these cases are still making their way through the courts, so far it appears that model inputs – the training data that these models learn from – fall under fair use. But this deal is about results – what the model returns based on your demand – where IP owners like Disney have a much stronger argument
Reaching an output agreement solves a host of messy, potentially unsolvable problems. Even if a company tells an AI model not to produce Elsa at a Wendy's drive-through, for example, the model might know enough about Elsa to do so anyway — or a user might ask it to create Elsa without asking for the character by name. It's a tension that legal scholars call the “Snoopy problem,” but in this case you might as well call it the Disney problem.
“Faced with this increasingly apparent reality, it makes sense for consumer-facing AI companies and entertainment giants like Disney to consider licensing arrangements,” says Sag.
