After Supreme Court Loss, Disney May Have a Backdoor Out of Trouble

The Walt Disney Company was dealt a harsh blow last week when the Supreme Court told a lower Court to revive a lawsuit against the company for using Lots-O-Huggin’ bear in Toy Story 3 (2010). The trademark for a similar bear is owned by Diece-Lisa Industries Inc. of New Jersey, which sued Disney in 2012.

Related: Disney Loses Supreme Court First Amendment Case

The case against Disney was initially dismissed, saying that because Disney and Pixar Animation used the bear in an artistic endeavor, it was protected under the First Amendment. But lawyers for Diece-Lisa Industries argued that Disney profited off the use of the bear in the film and through merchandise sales.

The repercussions of this case could have severe consequences for Disney. If the Ninth Circuit Court of Appeals rules against Disney, which is entirely possible now, it will have to pay millions. The Toy Story franchise is worth billions to Disney, with a fifth movie in the works. 

Related: Disney’s Supreme Court Loss Will Have A Ripple Effect Across an Already Struggling Company

But according to Bloomberg Law, the Walt Disney Company may have a way out of this. There is the easy way: write a check and get it over with, but Disney has fought this lawsuit for over a decade; no reason to think they will just write a check now.

There is also the legal way. Pixar only used the name “Lots-O’Huggin'” once in the movie, and the name does not appear anywhere on any merchandise Disney sold. For the remainder of the film, he is called “Lotso.” Disney could make the argument that this is an entirely different character.

IP attorney Cynthia S. Arato of Shapiro Arato Bach LLP told Bloomberg Law:

It looks like Disney uses the word ‘Lotso’ in plain font dwarfed by the Toy Story 3 logo. Disney may have a compelling way to show that it’s not using the name ‘Lotso’ as a mark but as a character name for expressive purposes, even within the merchandise.

Disney could also argue that it’s impossible to trademark every pink bear in the world, so theirs is no different than one you would buy for Valentine’s Day.

Arato continued:

People aren’t clear where you draw that line for certain uses. So there’s just gray area here, and we’re going to need to see how that evolves in the courts.

And Disney is hoping to ride that gray area to a legal victory. Disney will need to start piling up some legal wins, especially given the case it is currently fighting with Florida Governor Ron DeSantis.

Governor DeSantis asked a Federal Court judge to throw out Disney’s suit against him, claiming he had “absolute legislative immunity.” Disney’s lawsuit stems from DeSantis stripping Walt Disney World of its self-governing special district as retaliation against the company for speaking out against Florida’s “Don’t Say Gay” bill.

For now, Disney has to deal with its first free speech lawsuit. Disney must win this court case before it goes back to the Supreme Court against Florida Gov Ron DeSantis.