Disney’s Supreme Court Loss Will Have Ripple Effects Across the Already Struggling Company

The Walt Disney Company suffered a significant blow in front of the Supreme Court last week. The Court ruled that a lower court should revive a First Amendment lawsuit against Disney that the lower Court had thrown out. The case stems from Disney’s use of Lots-O-Huggin’ in Toy Story 3 (2010). A New Jersey company had the trademark on a similar stuffed bear and sued Disney for its use in the blockbuster film.

Disney claimed it had a First Amendment right to use the bear for artistic purposes in the film. The case will return to the United States 9th Circuit Court of Appeals in California to be retried.

Related: Disney Loses Supreme Court First Amendment Case

This comes at a terrible time for the Walt Disney Company as its movie and television businesses are hemorrhaging money. Disney is also embroiled in a lawsuit against Florida Governor Ron DeSantis, which could end up in the Supreme Court. Should the lower court rule in favor of Randice-Lisa Altschul’s Diece-Lisa Industries, the toymaker who holds the trademark for the Lots Of Hugs bear, which the one in Toy Story 3 is based on, Disney is going to have to write a large check.

Neama Rahmani, a former federal prosecutor and president of West Coast Trial Lawyers, told Newsweek:

Whatever portion of Toy Story 3, the profit that was attributed to this bear…that’s when expert witnesses come in and say this bear wasn’t in [Toy Story 1] and [Toy Story 2]….It’s gonna be up to a jury, and juries do this all the time and it’s kind of typical of the cases where they have to apportion liability.

Toy Story (1995) made $373 million, and Toy Story 2 (1999) made $497 million. Toy Story 3 made a whopping $1.07 billion. Those figures do not include the money made from toy sales from the three films. If the toymaker can show that Lots-O’-Huggin’ being in the final movie made it successful, Disney will have to pay the company hundreds of millions of dollars.

The Walt Disney Company is facing obstacles on all fronts. It has lost millions on its latest movie slate and over four million Disney Plus subscribers.

Disney will be back in front of this Supreme Court again in its fight with Gov Ron DeSantis. DeSantis and the Florida Legislature stripped Disney World of its self-governing Reedy Creek Improvement District over its response to the Parental Rights in Education Act, the Florida statute known as the “Don’t Say Gay” bill. The case is now in Florida District Court.

With the Walt Disney Co losing its special district and entertainment distribution struggling, this ruling comes at a terrible time. And it could be an omen of things to go in front of this Supreme Court for Disney.

We will continue to update this story at Disney Fanatic.