Name of author: Manannya Bhandari (IV Year, Symbiosis Law School, Pune)
The world of law is on tenterhooks. In a potentially landmark case, Disney and NBCUniversal have made a collective complaint against AI image generator Midjourney in the first of what promises to be several lawsuits that will redefine the future of generative AI. This is not just another copyright conflict, but a very significant die-off where the wealthiest intellectual property and monetizable Hollywood assets are in direct conflict with the transformative and, some would go as far as to say, exploitative capabilities of artificial intelligence. This lawsuit is a decisive event for any person in the world who might be living in the creative, legal or even the technology industries, and the position regarding this case is most likely to form a new precedent on copyright law in the digital world.
The ramifications are massive. A company such as Midjourney that is said to have had more than $300 million in revenue last year has constructed its business around the ability to generate images instantly at a very high quality. It already has more than 20 million users whose ability to produce new works of art based only on a few text instructions is unprecedented. Disney and NBCUniversal, with their multi-billion-dollar empire, which was constructed over decades of creative innovations and safeguarded intellectual property, argue that such a business model is merely a copyright free-rider. The underlying legal issue on this matter is whether such copyrighted material can be used to train an AI system, and the resulting images produced out of the training can be classified as a legal fair use or unacceptable bootlegging.
A “Bottomless Pit of Plagiarism”
The 143-page complaint filed by the plaintiffs is a textbook of legal tactics written to trap Midjourney in various aspects. They base their arguments on two major theories of liability; direct copyright infringement and secondary copyright infringement.
To begin with, they claim that direct infringement has taken place since the AI models created by Midjourney were trained on a considerable body of plaintiffs’ works without permission (including beloved characters of such franchises as Star Wars, the Marvel Cinematic Universe, Frozen, and Shrek, among others). The complaint further makes this really dramatic with 28 one-by-one comparisons, side-by-side of the images that Midjourney generated and the original copyrighted characters, and a striking and undeniable substantial similarity is evident. As an example, using the command issued by a user to find an image that contains the description of a knight having a red lightsabre and a black helmet may yield the exact visual and recognizable, as well as identifying, copy of the unauthorized copy of Darth Vader, infringing the exclusive rights of the studios to reproduce and create derivative works under 17 U.S.C. § 106.
Second, the studios claim secondary infringement, a theory with deep roots in legal history. Second, the studios assert secondary infringement, a law theory that dates far back in legal history. Their claim is that Midjourney can be held responsible for the infringing actions of its users by both contributory and vicarious infringement. According to the complaint, the Midjourney service allows and promotes the blatant and extensive direct infringement of the copyright of the Plaintiffs. To ascertain this, the studios will make a comparison with landmark cases that have formed the law of secondary liability. A very effective precedent was the case of MGM Studios, Inc. v. Grokster, Ltd the Supreme Court ruled that the peer-to-peer file-sharing service was subject to liability on the theory of inducement i.e. it ruled that a technology provider can be liable where it provides a technology knowing that some users will use it to infringe a copyright if it distributes a device with the express purpose of encouraging its use to infringe copyright. The studios will probably claim that the whole business model of Midjourney is an inducement to infringe and hence they are a digital pirate in the Grokster mould in the context of today, rather than a neutral technology platform, like the VCR in the famous Betamax instance.
Midjourney’s Bold Defence: Fair Use
The way Midjourney will deal with the law is based on one defence: fair use. This is a doctrine accepted under US law and codified in 17 U.S.C.107, which constitutes an essential exception to copyright infringement. There are four factors that must be considered by the court and Midjourney has given careful arguments in support of all of them.
Purpose and Character of the Use
Midjourney will attempt to claim that training its AI model is a use that is quintessentially transformative. A transformative use may include circumstances in which the use in some way creates an addition to the original work in the form of a new purpose or changed nature. In this perspective, the AI will not literally reproduce and keep the original works but will learn the statistical correlations and trends on them. The products are not replications but something altogether new, a new type of expression, meaning or message. This position is substantiated by the landmark decision made by the Supreme Court in Campbell v. Acuff-Rose Music, Inc., which elucidated that even work of high commercial works such as a rap parody could be considered transformative. But there is a substantial new problem raised by this argument after the Supreme Court case of Andy Warhol Foundation for the Visual Arts, Inc. v. Goldsmith in 2023. The Warhol case contained the broad definition of transformative use by stating that the images of the musician Prince, created by Warhol based on a copyrighted photograph, were not transformative: they had the same commercial point as the original did. This decision might be the death-blow to Midjourney whose commercial ventures can be the perceived as having no original purpose other than to copy the originals.
Nature of the Copyrighted Work
This factor usually falls on the side of fair use where the original work is factual as opposed to being creative. As the works of Disney and Universal are quite imaginative (movies, books, cartoon characters), it would typically be a disadvantage of Midjourney. The significance of this factor, however, will be downplayed by the firm as it emphasizes the life-changing quality of its use.
- Amount and Substantiality of the Portion Used
The question that this factor enquires about is whether the work that was put down is using a substantial part of the former. Midjourney will object that although its model trained itself on billions of images, the “percentage” of any particular piece of copyrighted material that it learned is statistically trivial and not the objective-correlative of the work. In terms of artificial intelligence, this is a new form of argument because the model does not physically reproduce a sizable element of one image.
Effect on the Potential Market
Midjourney will argue that its work does not compete with work of the studios as an alternative and thus cannot cause detrimental effect on the studio market. Their base case will be that an AI-image of a character is not a replacement of a licensed movie or merchandise. It might also follow the decision of Sony Corp. v. Universal City Studios in which the Supreme Court decided that though the VCR could infringe copyright, the VCR was not a copyright-infringing machine since it had a substantial non-infringing use. Midjourney will retort that its AI has literally unlimited legitimate and non-infringing applications, like visualizing architecture and creating concept art.
Conclusion
The case involving Disney and NBCUniversal suing Midjourney is a matter of law, but also a major philosophical discussion about the future of the creative industries. It compels one to reckon how copyright, a legal structure that is meant to safeguard the intellectual works of humans, will evolve in a new era where machines can create art.
The ruling of the court would define the years to come in terms of legality. If Disney and Universal win, there is a possibility that the future may become one where the manufacturers of generative AI will be pushed into licensing training data, resulting in a new regulated data market of intellectual property. On the one hand, a win by Midjourney would entrench the idea of fair use of AI during training and generation of outputs, which could open the floodgates to new innovation efforts, but equally bring enormous difficulty in making content makers who want to protect their work.
At the end of the day, this court case involves a balancing act. The court will have the last word on where this balance is addressed- and whether the AI art revolution is a period of artistic renaissance or a 100-lift of the greatest intellectual property theft ever.