Why Can’t Disney Apply the “Hakuna Matata” Mantra to Copyright Infringement?
Everything the light touches is in Disney’s intellectual property kingdom. Emerson Elementary in Berkeley, California recently learned that the hard way when they received a demand for compensation from the media juggernaut for showing the 2019 remake of The Lion King to students during a “parent’s night out” fundraiser without a public performance license.[1] The unexpected $250 license fee for the showing constituted a third of what the school raised.[2] While that kind of money is essential to the school’s operation (paying faculty and funding school programs), its absence would be considered a trivial accounting error to Disney—if it was noticed at all.[3] Despite this vast disparity of need, Emerson Elementary’s Parent-Teacher Association (“PTA”) begrudgingly agreed to cover the license fee.[4]
The incident quickly garnered national attention after major news outlets such as CNN and The New York Times released articles featuring quotes that decried the demand as “appalling” and “uncalled for.”[5] In a bald-faced attempt to offset the damaging PR that the story generated, Disney withdrew their fee demand.[6] Additionally, CEO Robert A. Iger publicly apologized to the school’s PTA on behalf of the company and promised to “personally donate to their fundraising initiative.”[7] However anaphylactic Disney’s reaction may have been, in the end, little Emerson Elementary used the stone of public outcry to defeat goliath Disney’s petty demand for a license fee. Disney learned their lesson and the world is better for it, right? Right?!
Well, probably not.
The plight of Emerson Elementary is hardly unique. Disney is notoriously litigious while protecting its intellectual property.[8] The company is known for mercilessly slapping lawsuits on small businesses and schools alleging various unlicensed uses of characters from Disney rainmakers such as “Frozen” or “Star Wars.”[9] This proclivity is certainly not new.[10] The harsh reality for small-time infringers is that Disney simply cannot afford to be lenient.
An international entertainment behemoth valued at over $250 billion[11] (with a capital B) can’t afford to let a $250 infringement slide? That’s right. But Disney doesn’t care about some trivial license fee; what they really care about is maintaining a strict legal monopoly on their intellectual property, arguably their most valuable asset.[12]
Disney’s rigid and vigorous enforcement of its intellectual property rights accomplishes (at least) two objectives. First, it dissuades potential infringers by demonstrating that anyone can end up in the House of Mouse’s crosshairs. If Disney chose not to pursue certain infringers or to pursue only infringers of specified means, such selective non-enforcement could lead to the perception that the company will allow smaller infringers to proceed with impunity. This would almost certainly lead to an increase in small-scale infringement that Disney would eventually be forced to crack down upon, costing Disney more in litigation expenses and potentially bankrupting the small businesses which relied upon Disney’s non-enforcement. Therefore, Disney’s enforcement against even insignificant infringers may be better for both its stockholders and some industrious entrepreneurs.
Second, it allows Disney to easily dispute several defenses that an alleged infringer may wish to assert, including laches and equitable estoppel.[13] Laches may be asserted as a defense when the plaintiff’s delay in enforcement has unfairly prejudiced the defendant.[14] Equitable estoppel has a similar standard that also contemplates the justified reliance of the defendant on the action or inaction of the plaintiff.[15] Imagine that industrious entrepreneur Sarah begins selling Disney branded t-shirts from her garage but Disney refrains from taking action because her small operation is of no consequence to its bottom line. After two years, her sales have grown a bit and the company has a viral moment on Instagram. She decides to invest a substantial sum of her savings into the business in order to capitalize on the opportunity. If Disney then feels threatened and decides to sue Sarah, it may be more difficult and time consuming to dispute the laches and equitable estoppel defenses that Sarah is likely to assert. Taking action to stop Sarah in her garage before she attempts to expand into a warehouse saves both parties time and money.
So, has this different perspective softened the viscerally wrong quality of Disney’s demand for compensation from Emerson Elementary for you? Probably not. I do hope, however, that this post has encouraged you to consider Disney’s demand with your head as well as your heart.
Footnotes
