Disney Suffers Another Legal Setback With More to Come

This has not been a good year for Disney on the legal front. Over the summer, the Walt Disney Company lost a First Amendment lawsuit over using Lots-a-Huggin bear in Toy Story 3 (2010). That suit could cause Disney to pay millions to the designer of the bear. The year continued with Disney being sued for using a bag in Indiana Jones and the Dial of Destiny (2023). If Disney loses, they will again have to write a huge check.

But this week, Disney suffered what appears to be its final court loss of the year. An Oakland, California jury found that Disney illegally infringed on a VFX company’s intellectual property in creating the effects in the live-action Beauty and the Beast (2017). Disney was accused of using a VFX technology owned by Rearden without paying royalties to the company, but instead, Disney subcontracted with another firm that was not legally allowed to use the technology.

Disney used the MOVA technology in Beauty and the Beast, Avengers: Infinity War (2018), and Avengers: Endgame (2019). Disney and Marvel Studios teamed up with DD3 to create the look of the films, using MOVA, but DD3 did not own the technology it used to create the VFX. Rearden, a firm started by inventor Steve Perlman, developed the original technology.

The MOVA technology first appeared in The Curious Case of Benjamin Button (2008). It revolutionized film as it aged Brad Pitt in reverse. In 2015, the Academy of Motion Picture Arts and Sciences recognized the VFX technology with an honorary award, and that’s when the legal issues started. Greg LaSalle, who was working with Digital Domain, accepted the award. LaSalle and Perlman worked together at Rearden. A judge later concluded that LaSalle never owned MOVA or had the authority to use or sell it.

But by then, Digital Domain, through a British Virgin Islands-based shell company, had licensed MOVA’s use to DD3, and that’s where Disney comes in. Disney hired DD3 to work on Beauty and the Beast in March 2015, and the film was released in March 2017. The court ruled that Rearden owned MOVA in August 2017. Disney contended that Rearden should not receive a cut of the film’s profits due to that timing.

This case was only over Disney’s use of the technology in the live-action Beauty and the Beast. Separate trials will be held for Disney’s use of the technology in Avengers: Infinity War and Avengers: End Game. 

Despite taking the loss in the case, it was only a minor hit for Disney. Rearden was seeking a portion of Beauty and the Beast’s profits. The film made $1.27 billion at the box office. Rearden estimated that its visual effects technology accounted for 10-15 percent of the total profits. Instead, the jury awarded Rearden LLC $600,000.

Lawsuits for the final two films won’t take place until after the New Year unless Disney decides to settle first.

We will continue to update this story at Disney Fanatic.