The Role of Intellectual Property in Disney’s Success

The name ‘Disney’ takes us on a trip down memory lane, bringing back the magical stories and characters that were a fundamental part of our childhood, and continue to be a part of our lives. These creations are a fundamental part of Disney’s growth as well and have played a role in making the company, the media empire it is today. Disney, being a fierce protector of its creations, holds a rich ensemble of intellectual property and continues to enjoy exclusive rights to them. How it has exploited its intellectual property and simultaneously expanded its portfolio through the acquisition of other intellectual property intensive players has been the key to Disney’s phenomenal success.

Introduction

The name ‘Disney’ takes us on a trip down memory lane, bringing back magical stories and fairy-tales which were a fundamental part of our childhood. The Disney Group and Walt Disney have created some of the most iconic and unforgettable characters in the history of the entertainment industry. Mickey Mouse and his friends, Snow White, Cinderella, Baloo the bear, and Mowgli the man-cub are only the beginning of an incredible list of characters that we cannot imagine growing up without.

While Disney has had a lasting impact on this generation of adults, its relevance today has only increased. Almost a century after the young animator Walt Disney set up a small animation studio in Burbank, California, Disney has grown to become a multi-million-dollar media entertainment giant and a dominant player in media markets across the globe. The key to Disney’s success and growth model lies in the vast intellectual property portfolio it is maintained from day one. How they’ve exploited their intellectual property and simultaneously expanded their portfolio through the acquisition of other intellectual property intensive players has made it the media empire it is today.

A Fierce Guardian of its Intellectual Property

Walt Disney Productions has been a fierce protector of its IP, creating and acquiring rights to its characters, scripts, animation styles, and maintaining their exclusivity. It has been so successful that since its inception in the 1920s, not a single one of Disney’s intellectual property has entered the public domain.

Disney is known, rather infamously, for being one of the largest lobbyists for copyright law in the United States, in its efforts to keep Mickey Mouse out of the public domain. At the time of Mickey Mouse’s creation in 1928, the Copyright Act of 1909 was the governing law on copyrights in the United States. Under this Act, original works that were published and had a notice of copyright affixed to them were granted federal copyright protection for twenty-eight years from the date of publication, with the option for renewal for another twenty-eight years. Therefore, Mickey Mouse could only be protected for a maximum period of fifty-six years i.e., until 1984 before it would fall into the public domain. Determined to protect this character, Disney began lobbying the Congress, resulting in the Copyright Act of 1976. The 1976 Act extended copyright protection for already-published corporate copyright to seventy-five years, thus extending Disney’s exclusivity over Micky Mouse till 2003. However, as 2003 drew nearer, their further lobbying efforts were successful once again and the Copyright Term Extension Act (CTEA), 1998, jokingly known as the “Mickey Mouse Protection Act” was passed, extending corporate copyrights to ninety-five years. According to the current copyright protection law in the U.S, Disney’s first copyright protection of Mickey Mouse’s is set to expire on January 1, 2024. However, the Mickey Mouse copyright that will expire in 2024 is that of his original incarnation in Steamboat Willie and Disney will still own copyrights to later incarnations of the mouse.[1] Only the original black and white Mickey Mouse with no gloves will enter the public domain, though copyrights over later incarnations will gradually expire in the coming decade.

Interestingly, most of Disney’s successful works are derivatives of prior work existing in the public domain. Disney has adapted many old fables and fairy tales including Snow White and the Seven Dwarfs, Aladdin, Cinderella, Mulan, and Sleeping Beauty. Even Mickey Mouse’s first short film Steamboat Willie is derived from prior work. Therefore, most of the Disney characters are inspired by work that has since fallen into the public domain.

Copyright is a type of legal protection given to creators and such creators receive exclusive rights to the use and distribution of the work for a set amount of time[2] before it falls into the public domain. By maintaining exclusive rights to use and distribute its copyrights, Disney has made millions of dollars off commercializing its globally recognized characters. These characters appear on a range of merchandise from toys, clothes, to almost every consumer product. Merely holding these copyrights has been immensely profitable for Disney, contributing immensely to its financial growth. Disney is known for being highly litigious and has aggressively pursued copyright infringers to prevent unauthorized use of its copyrights. An official memo from Disney states:

“Disney takes the enforcement of these rights very seriously. We protect these rights so that we can continue to provide quality entertainment that measures up to the standards that our audience has come to love and expect. We welcome reports of suspected infringement of any of these rights.”

 In 1989, it filed a lawsuit against the Academy of Motion Picture Arts and Sciences for using its character Snow White on the Academy Awards television show in an unflattering way and without permission.[3] It withdrew the lawsuit after the Academy apologized. In 1990, Disney filed a lawsuit and even obtained an injunction against the business of street vendors, preventing them from featuring Mickey and Minnie Mouse on T-shirts.[4] The injunction was powerful in that it extended to all Disney characters-not just to those whose copyrights had been infringed.[5] In 2016, Lucasfilm, a subsidiary of Disney, sued Micheal Brown for infringement of its Star Wars trademarks infringement. Brown operated businesses including New York Jedi, the Lightsaber Academy, and Thrills and Skills which purported to teach the ways of the Jedi.[6]  Disney recently won a federal lawsuit against Mouseprint Media, an online clothing retailer for copyright and trademark infringement after it used images including those from Star Wars, Mick Mouse, and the Disney logo without authorization.[7] Disney has a track record of sending numerous cease-and-desists, keeping its IP way out of reach.

Even though its copyrighted works are headed toward the public domain, Disney still holds several trademarks. A trademark can protect a character in the public domain as long as that character has obtained “secondary meaning.”[8] While Mickey Mouse will be protected through its 19 trademarks due to it being an inseparable part of the corporate identity of Disney,  many of the other characters cannot be protected from eventual public use. It even acquired a trademark on the Swahili phrase Hakuna Matata when associated with Disney’s classic The Lion King. Unlike copyright, a trademark does not expire and gives the owner of the mark the exclusive right to use the mark in connection with goods or services. Therefore, Disney will still enjoy a monopoly over a substantial part of its IP portfolio.

Expansion of its IP Portfolio Through Acquisitions

Apart from aggressively protecting its indigenously developed IP, Disney has simultaneously expanded its IP portfolio through collaborations with and acquisitions of other IP-intensive companies.

The 1995 acquisition of Capital Cities combined the profitable television network and its ESPN cable service with Disney’s Hollywood film and television studios and provided Disney with a major presence in filmed entertainment, cable television, broadcasting, and telephone wires.[9] This acquisition increased the company’s consumer base by distributing a wider range of content.

In 1991, a deal was struck between Pixar Animation Studios and Walt Disney Studios to produce three animated features.[10] This resulted in Toy Story, Bug’s Life, Toy Story 2, Monsters, Inc, Finding Nemo, and The Incredibles. Following its collaboration, Disney acquired the premier animated film producer in 2006. In 2009, Disney acquired Marvel Entertainment, Inc., which owns a myriad of intellectual property existing in the form of superhero characters including Spider-man and Iron Man. With the purchase of Lucasfilm in 2012, it acquired rights to the blockbuster Star Wars and Indiana Jones franchise. It continued the Star Wars franchise by releasing a commercially successful sequel trilogy consisting of Episode VII: The Force Awakens (2015), Episode VIII: The Last Jedi (2017), and Episode IX: The Rise of Skywalker (2019). With its recent acquisition of 21st Century Fox, Disney is set to be the largest media conglomerate in the world. This acquisition brought the rest of Marvel Entertainment including the X-Men, Fantastic Four, and Deadpool franchises under Disney and also gave television networks such as National Geographic and combined ownership of the online streaming service Hulu. The acquisition played a vital role in the launch of Disney’s very own online streaming service Disney+. Disney+ was a blow to other platforms, especially Netflix, which has had longstanding copyright licensing deals with Disney to stream its content.

First and foremost, these large acquisitions give Disney a huge film library with almost all the popular franchises. But more importantly, these now Disney-owned companies have rich IP relating to their characters and brands which now falls under Disney’s umbrella. Disney relies a great deal on merchandising and licensing opportunities that arise out of their intellectual properties, especially characters.[11] Its dominant market share and market power are a result of the nearly endless catalog of IP that it controls and profits immensely from.

Conclusion

The key to Disney’s success undoubtedly lies in the vast ensemble of intellectual property that it has not only created but invested in over the last century. The company’s efforts to strengthen copyrights in the hands of their creators and keep it out of the public domain, though severely criticized, has allowed Disney to extensively exploit and profit from their properties. Reliance on their abundance of creativity and their ability to keep up with changing times by acquiring new technology and content has enabled Micky Mouse’s House to become the media empire it is today.

FAQs

1. What is the key to Disney’s success?
2. What role did Intellectual Property play in Disney’s success?
3. How has Disney protected its Intellectual Property over the years?
4. What has Disney done to expand its Intellectual Property Portfolio?
5. What role has acquisitions of other players played in Disney’s success?

References

• [1]Kaitlyn Hennessey, Intellectual Proper Al Property—Mickey Mouse’s In —Mickey Mouse’s Intellectual Property Adventure: What Disney’s War on Copyrights Has to do With Trademarks and Patents, 42 Western New England Law Review 1 (2020)   https://digitalcommons.law.wne.edu/cgi/viewcontent.cgi?article=1830&context=lawreview
• [2] Copyright: Everything You Need to Know, UPCOUNSEL, https://www.upcounsel.com/ copyright
• [3] Aljean Harmetz, An Apology to Disney, The New York Times (April 7, 1989) https://www.nytimes.com/1989/04/07/arts/an-apology-to-disney.html
• [4] Walt Disney Co. v. Powell, 698 F. Supp. 10 (D.D.C. 1988)
• [5] Lauren Beth Emerson, Termination of Transfer of Copyright: Able to Leap Trademarks in a Singe Bound?, 75 Fordham Law Review 1 (2006) https://ir.lawnet.fordham.edu/cgi/viewcontent.cgi?article=4186&context=flr
• [6]Eriq Gardner, Disney’s Lucasfilm Sues Academy That Teaches People How to Use Lightsabers, Hollywood Reporter (October 17, 2016) https://www.hollywoodreporter.com/thr-esq/disneys-lucasfilm-sues-academy-teaches-938781
• [7] Disney Enterprises, Inc. v. Mouseprint Media, LLC (6:19-cv-02318)
• [8] Frederick Warne & Co., Inc. v. Book Sales Inc., 481 F. Supp. 1191 (S.D.N.Y. 1979)
• [9] Geraldine Fabrikant, The Media Business: The Merger; Walt Disney to Acquire Abc in $19 Billion Deal to Build A Giant for Entertainment, The New York Times (August 1, 1995)  https://www.nytimes.com/1995/08/01/business/media-business-merger-walt-disney-acquire-abc-19-billion-deal-build-giant-for.html
• [10]Jane Martinson, Disney snaps up Pixar in $7.4bn deal, The Guardian (January 25, 2006) https://www.theguardian.com/media/2006/jan/25/citynews.filmnews
• [11] Marvel and Disney: A Merger with Character, Illinois Business Law Journal, (September 20, 2009) https://publish.illinois.edu/illinoisblj/2009/09/20/marvel-and-disney-a-merger-with-character/