On 11 June 2025, Disney Enterprises Inc., together with its related companies, Marvel Characters Inc., MVL Film Finance LLC, Lucasfilm Ltd. LLC, Twentieth Century Fox Film Corporation (collectively, Disney), and Universal City Studios Productions LLLP and DreamWorks Animation L.L.C. (collectively, Universal), issued proceedings in the United States District Court, Central District of California, against MidJourney Inc. (MidJourney), alleging copyright infringement.  

Disney and Universal require little introduction, being the owners and creators of a myriad of well-loved film and fictional characters for over a century, including Star Wars, Shrek, Spider-Man, Toy Story and Frozen.

MidJourney is a company that develops, operates and sells its generative AI services to users on a subscription basis. The service that is the subject of the lawsuit is its generative AI Image Service (Image Service), which produces images in response to text prompts provided by users.

Disney and Universal allege that images generated by MidJourney’s image service infringe their copyrighted works. An example of a prompt referred to in the lawsuit is “Minions in the film Despicable Me, screencap”, which, when entered into the image service, allegedly produces a high-quality image that is nearly identical to, or amounts to a replica of, the copyrighted Minion character from the film. 

Disney and Universal’s allegations include that MidJourney:

• downloaded and accessed the data in Disney and Universal's copyrighted works to train the image service, without their consent;

• “cleaned” copies of the copyrighted works and put the works “through a filtering process and reformatted…the copies that were not filtered out in the cleaning process to train its image service”; and

• used the processed data derived from the copyrighted works to train the image service in a manner that resulted in infringement of the copyrighted works.

On 6 August 2025, MidJourney filed its Answer to the Complaint, denying liability and raising several defences, including that:

• the image service is a “type of neural network designed to produce original images in response to user instructions,” and that “[d]uring training, complex statistical relationships between visual features and words in the text-image pairs are encoded within the model…”;³

• “[t]raining a generative AI model to understand concepts by extracting statistical information embedded in copyrighted works is a quintessentially transformative fair use”;⁴ and

• the image service “…assists with the creation of images only at the direction of its users, guided by their instructions…”.⁵

MidJourney’s defence raises key questions about how its models operate. These include whether copyrighted works are stored or represented within the model, whether the neural network functions like memory in any way, or, as MidJourney contends, whether the models instead operate without memory (or any analogous representations), using statistical patterns to generate images solely in response to a user’s prompt.

Consideration of these questions, and the answers that follow (if any), could have far reaching implications for copyright infringement actions based on generative models.

We previously discussed some of these issues in our article Black Box” Infringement: Generative AI and Intellectual Property Rights, which examines the challenges of copyright infringement in AI models. MidJourney's response talks about the use of publicly available images in its training, but it is not clear from the Answer if, or to what extent that data might have included images over which Universal or Disney claim ownership.

Australia does not have an equivalent to the US "fair use" defences. In Australia, "fair dealing" defences are available, but those defences concern specific uses such as study and research, where the use is only to a limited extent.

However, while not directly relevant to how Australian Courts may consider infringement, the decision will likely still be commercially relevant given the international nature of many of the service providers, as well as the potentially global pool of artists and authors from whom infringement claims could arise. Depending on the outcome, it could have wide implications for both content creators and generative service providers alike.

In any event, it is likely that the case will facilitate debate concerning the legal characterisation of neural network technologies, and how their processes and structures fit within the current intellectual property concepts.

Although precisely how MidJourney will prosecute its defence remains to be seen, from the Answer an interesting scenario may well be considered, that being whether, even if the AI model does not use infringing works during training, the creation of images that are objectively similar to existing works, based solely on user prompts, could still be argued to constitute infringement.

In the MidJourney proceeding that question probably concerns whether a particular AI model memorises training data, or rather, 'map connections' between concepts, information, or ideas. However, if for argument’s sake you remove any allegation that copyright images were used in the training of the model, so that only the users prompting (probably very complex prompting) results in an image that appears to replicate a copyright work, what would the infringement position be in those circumstances? For example:

1. It might be that the deliberate, and probably very complex prompting required to produce a near replica of a copyrighted work, could be an infringement on the basis that the work was a copy in the author's (in this case, prompter's) mind, and the brush (for want of a better expression) used to reproduce the work only through a set of complex prompts.

2. Conversely, an objectively similar image created by chance through prompting, even if influenced in part by other works, seems to lack the necessary element of copying or reproduction, and would likely be considered an independent work, and not infringing.

We note that in its Answer to the claims, MidJourney relies upon its Terms of Service with its users, identifying that:  

"… MidJourney users are required by MidJourney’s Terms of Service to refrain from infringing the intellectual property rights of others, including Plaintiffs’ rights". 

The law in this area is far from settled. The continued uncertainty around intellectual property rights (and potential liabilities) calls for extra care when considering warranties provided in relation to copyright ownership, indemnities offered, as well as limitations on acceptable uses of generative tools. To discuss any compliance or risk management considerations relating to the use of generative AI, please contact our Intellectual Property team. 

References

• ¹ Complaint, [108].  
• ² Complaint, [115(b)].  
• ³ Answer to Complaint, preliminary statement.  
• ⁴ See ibid. 
• ⁵ Answer to Complaint (n 3).