Disney v. MiniMax — Court Denies Dismissal of AI Copyright Suit, Finds Hailuo AI’s Character Generation Plausibly Infringes

Background

Twelve entities spanning the Disney, Universal, and Warner Bros. studio groups sued MiniMax — a Chinese AI company valued at approximately $4 billion — over its Hailuo AI image and video generation service. The plaintiffs alleged that when users prompt Hailuo AI with the name of a copyrighted character, the service generates “near-perfect likenesses” with “extensive nuance and detail, background elements, costumes, and accessories beyond what was specified in the prompt.” Characters at issue include Spider-Man, Darth Vader, Yoda, the Hulk, Homer Simpson, Buzz Lightyear, Batman, Superman, Shrek, Scooby-Doo, and dozens more.

The plaintiffs further alleged that defendants actively promoted infringing uses: their YouTube channel featured videos titled “Hailuo AI | Superheroes will heal your soul” with AI-generated images of plaintiffs’ characters, and they ran paid Instagram partnerships advertising AI-generated character content. MiniMax marketed the service as a “Hollywood studio in your pocket.” The defendants filed two motions: Shanghai-based SXJT moved to dismiss for lack of personal jurisdiction, and Singapore-based Nanonoble moved to dismiss for failure to state a claim.

The Court’s Holding

On personal jurisdiction over the Chinese parent (SXJT): The court found that SXJT’s own USPTO filings undermined its jurisdictional defense. SXJT had filed a U.S. trademark application for the MINIMAX mark and submitted a verified statement of use confirming the mark was in use in commerce with AI software services — directly contradicting its declarations denying any U.S. presence. The court held this was “prima facie evidence that SXJT was operating the Hailuo AI app in the United States,” sufficient to establish minimum contacts at the pleading stage.

On the copyright claims: The court dismissed defendants’ numerous arguments as missing “the forest for the trees.” Key rulings included:

• Character copyrightability: Applying DC Comics v. Towle, the court found no need to analyze each character individually — “a single protected character is sufficient to sustain a plausible claim,” and inputting a character’s name into Hailuo AI produces near-perfect visual reproductions establishing they are distinctive.
• Volitional conduct: Defendants argued the 52 specific examples of infringing outputs were created by plaintiffs’ own counsel. The court rejected this — the examples plausibly establish that Hailuo AI “readily produces infringing images when prompted,” and defendants’ conduct goes beyond merely operating a website where users can upload infringing content.
• Contributory infringement under Grokster: Marketing the service as a “Hollywood studio in your pocket,” advertising with copyrighted characters, and sponsoring instructional videos showing how to generate infringing content sufficiently alleges inducement of infringement.
• Extraterritoriality sidestepped: Because the output-based infringement theory independently sustains the claim, the court declined to reach whether AI training on copyrighted works occurring entirely abroad violates U.S. copyright law.

Key Takeaways

• AI-generated character reproductions can be direct infringement. When an AI tool produces near-perfect likenesses of copyrighted characters from text prompts, that plausibly constitutes unauthorized copying — even at the motion to dismiss stage.
• USPTO filings can establish jurisdiction over foreign AI companies. SXJT’s own trademark application and verified statement of use contradicted its denials of U.S. operations, providing a potential blueprint for plaintiffs seeking to bring foreign AI developers into U.S. courts.
• Grokster inducement theory applies to generative AI. Companies that market AI tools for creative uses, advertise with copyrighted content, and sponsor tutorials showing infringing applications may face contributory infringement liability.
• Test-generated outputs are admissible evidence. The court implicitly accepted that attorneys’ deliberate testing of an AI system to generate infringing outputs can serve as evidence of the system’s capabilities and the defendant’s liability.

Why It Matters

This is one of the first federal rulings allowing copyright infringement claims against an AI image and video generation company to proceed to discovery on the merits. For the generative AI industry, the opinion signals that building tools capable of reproducing copyrighted characters — and especially marketing those capabilities — creates substantial legal exposure. The extraterritoriality question was intentionally left open, meaning the thorny issue of whether AI training on copyrighted works abroad violates U.S. law will likely be addressed later in this case or in parallel litigation. With discovery now proceeding, the case will likely produce significant revelations about how Hailuo AI was trained and what safeguards (if any) were implemented to prevent generation of copyrighted content.