Disney and Universal Take a Hard Line Against AI Image Generation Firms

Disney and Universal claim Midjourney’s AI has reproduced iconic characters without permission, marking a turning point in entertainment’s legal strategy against unsanctioned AI use.

Tuxyso / Wikimedia Commons

Disney and Universal, two of Hollywood’s most powerful entertainment giants, have escalated their legal battle with the AI industry, filing what industry experts are calling one of the most consequential lawsuits to date. In their complaint filed June 11 in a California federal court, the studios argue that Midjourney’s popular AI image-generation tool not only draws from but essentially reproduces their copyrighted characters—franchises like Star Wars, Marvel, Minions, and The Simpsons—without consent or licensing.

The lawsuit is clear in its purpose: to curb what it labels as a “virtual vending machine” that can churn out trademarked characters on command. Law professor James Grimmelmann of Cornell says the case is unusually strong because of side-by-side comparisons showing just how closely Midjourney’s outputs match the original Disney and Universal assets. That visual similarity—according to legal analysts—could tip the balance away from a fair-use defense, especially when so much of the training data is allegedly unlicensed.

Hollywood’s broader goal, insiders say, isn’t to hamstring AI, but to secure a seat at the table. With more than 35 copyright-related AI lawsuits already active, studios want to ensure future use of their intellectual property is tied to licensing fees and compensation. Film industry legal counsel believe a victory in this case could establish new obligations for AI companies to filter or exclude copyrighted content from their outputs or face restrictions.

Critics of Midjourney’s practices have long argued that generative AI startups have profited by training models on billions of copyrighted works without contributor compensation. Midjourney may claim these actions are “transformative,” akin to Google Books or remixes that courts have sanctioned under fair-use; but Disney and Universal contend that their characters are recognizable—and iconic—elements, not background noise in an AI training corpus.

From a financial standpoint, stakes are high. Midjourney reportedly generated roughly $100 million in revenue last year. Disney and Universal are seeking unspecified damages plus an injunction to stop further infringement—and possibly force Midjourney to implement filtering systems that prevent producing copyrighted characters on demand.

The lawsuit also signals a shift in how Hollywood approaches AI regulation. Previously, studios pursued partnerships and licensing deals with tech firms, but those were often limited to analytics or script assistance. Now, as AI image and video generators challenge fundamental notions of ownership and creative control, studios are signaling zero tolerance for unlicensed use of their proprietary assets.

This case isn’t happening in a vacuum. Earlier this week, the U.S. Congress introduced draft legislation aimed at requiring AI companies to disclose when content is AI-generated, plus enforce strict measures around deepfakes of public figures. In parallel, unions like SAG-AFTRA and WGA continue demands for stronger protections around digital likenesses, a concern that films like Avatar and Terminator have already raised companies to address informally through internal policies.

If Disney and Universal prevail, it could upend the business models of AI firms that depend on unlicensed images to build their models. It may also set a legal precedent that extends to other creative fields—music, writing, even sports broadcasting.

For now, both sides seem poised for showdown. Midjourney has not publicly responded, while Disney and Universal are pressing ahead, backed by mounting public support from creators who fear appropriation of their work.

As the entertainment world awaits a judge’s ruling, one thing is clear: the collision between AI’s appetite for data and Hollywood’s demand for control has turned into a courtroom war—and its outcome could shape the future of creative ownership for generations.