Disney Sends Cease and Desist to Character AI

The Walt Disney Company (DIS) has escalated its efforts to safeguard its vast intellectual property portfolio amid the burgeoning AI landscape. Last week, Disney served California-based AI startup Character.AI with a cease and desist letter, asserting the unauthorized use of Disney’s copyrighted characters within the startup’s chatbot platform, a Disney spokesperson confirmed to CNBC.

Character.AI, which allows users to create and interact with AI-driven personas, has garnered significant attention and investment, including a reported licensing arrangement with Google in 2024. The platform utilizes sophisticated large language models (LLMs) to generate realistic and engaging conversations, fueling concerns among media conglomerates like Disney regarding potential IP infringement.

A Character.AI spokesperson conveyed that the specific characters identified in Disney’s letter have been removed. The spokesperson added, “It’s always up to rightsholders to decide how people may interact with their IP.” Furthermore, confirming that while some characters on its platform are original creations, others are “inspired by existing characters that people love.”

“We want to partner with the industry and rightsholders to empower them to bring their characters to our platform. Our goal is to give IP owners the tools to create controlled, engaging and revenue-generating experiences from deep fandom for their characters and stories, expanding their reach using our new, interactive format,” the Character.AI spokesperson told CNBC.

This legal maneuver underscores the growing tension between traditional media giants and the rapidly evolving AI sector. Disney, like other media companies, is grappling with how to adapt to a world where AI can generate content that potentially infringes on existing copyrights.

This isn’t Disney’s first foray into the AI copyright battle. The company is already engaged in ongoing litigation against AI image generator Midjourney, alleging the unauthorized use and distribution of AI-generated characters derived from popular franchises such as “Cars,” “Toy Story,” “Shrek,” and “The Avengers.”

The legal challenge against Character.AI arrives at a pivotal moment, as investors and industry observers closely scrutinize the legal and ethical boundaries of AI-generated content. Character.AI is not alone in facing such issues; debates about AI companies’ approach to IP are surfacing more regularly.