Reddit v. Anthropic; Disney & Universal v. Midjourney: Reshaping the AI Battlefield (Updated)

Rights holders try to avoid the fair use quagmire

There’s a subgenre of AI boosterism popular among those who wish not to be seen as reflexively anti-copyright. It holds that copyright enforcement should focus on infringing outputs of generative AI systems, not on the training inputs. It’s an evasion more than an answer to the objections of creators and rights holders to the unlicensed use of their works in training, an attempt to deflect liability for infringement from the developers of AI models onto their users, the better for developers to continue making use of copyrighted material unimpeded.

Unsurprisingly, few rights holders have adopted the approach. Until now.

Last week, Disney and Universal Studios sued Midjourney for copyright infringement. The studios’ 110-page complaint (143 with appendix) refers to the likelihood that Midjourney included the studios’ content in training its models and stored the images within the model. But the two counts of infringement it actually charges are focused exclusively on the models’ outputs — specifically the generation of near-exact copies of Disney’s and Universal’s copyrighted costumed and animated characters.

Count 1: “Midjourney has directly infringed Plaintiffs’ Copyrighted Works by unlawfully reproducing, publicly displaying, distributing, and making derivative works based on Plaintiffs’ Copyrighted Works both in developing and training its Image Service and in the output Midjourney generates for its subscribers.”

Count 2: If Midjourney contends that its own subscribers are the volitional actors responsible for making the copies of Plaintiffs’ Copyrighted Works… such copying was done (and is being done) without Plaintiffs’ authorization or consent and constitutes copyright infringement under the Copyright Act. Midjourney is vicariously liable for these acts of direct copyright infringement.”

The suit is a first for Hollywood. Until the latest filing, the major studios had refrained from taking legal action against AI companies. One reason, presumably, is that they are keen to make extensive use of generative AI themselves and for now they need the resources and expertise of the technology companies to get there. Another is that Hollywood is currently reeling from major shifts in viewer behavior and root-and-branch disruptions to the business — not conditions conducive to launching an expensive legal fight with the likes of Google, Microsoft, Amazon, and OpenAI.

So why would Disney and Universal choose now to strike? One reason is that they have more to protect in animated and customed characters than Sony, Warner, Paramount, or Netflix — from strategically critical movie and TV franchises, to theme park attractions, to merchandising and other important revenue streams. Another reason, alluded to in the complaint, is that Midjourney recently confirmed plans to introduce a video generator, posing a more potent threat to the studios’ IP than static images.

The attorneys representing the studios — from Jenner & Block, fresh off its triumph over Donald Trump’s effort to punish the firm for representing clients he doesn’t like — have certainly done their homework. The complaint features page after page of images of the studios’ animated character juxtaposed with copies generated by Midjouney, complete with the prompts that elicited them. It also documents the multiple steps the studios took prior to filing the lawsuit to put Midjourney on notice of the alleged infringement and demand it cease and desist from the infringing conduct.

I’ll leave it to the lawyers to weigh the legal merits of the studios’ case. But it seems notable that it represents the second major lawsuit by a rights holder against an AI company in as many weeks that does not charge the defendant with copyright infringement directly related to the use of its content in training. As discussed in my previous post, Reddit recently sued Anthropic without mentioning copyright at all.

Two examples do not yet add up to a trend. But with AI training cases bogged down in a quagmire of fair use determinations, it would not be surprising if rights holders and their legal teams were looking for other avenues of attack.

Not that they’re ignoring the training angle. Reddit, after all, is suing Anthropic for breaching its user agreement to scrape its content for the purpose of using it to train AI models. Disney and Universal assert Midjourney is liable for the images its users generate with its models, which they could only do if the models had seen the originals in its training.

The studios’ complaint also describes the steps involved in preparing a dataset for training, from collecting the images to cleaning, filtering, and reformatting the data for ingestion — each of which, they claim, involves making multiple infringing copies of the images.

In both cases, it appears, the the plaintiffs hope to avoid getting trapped in a drawn out debate over whether the training process itself is sufficiently transformative to qualify as fair use. Infringement at the start; infringement at the end. What happens in between is not relevant to their legal arguments, and therefore neither should any defense based on the process in between be relevant.

Whether that strategy will succeed legally in either case remains to be seen. But it seems clear in both cases the rights holders are looking to re-shape the battlefield to fight on more favorable ground.

UPDATE: Midjourney has now launched its AI video generator, called V1. It’s limited for now, but it still ups the stakes for the studios. V1 is an image-to-text generator, in which users can upload an image, or use an image generated by Midjourney, and V1 will create a four to five second video based on it. Like Midjourney, it’s only available at launch through Discord, and is only available on the web, not via app.