Supreme Court Rules Against Disney in Lawsuit Over $3 Billion Film Franchise

“Toy Story 3″/Credit: PIXAR Animation Studios

The Walt Disney Company is known for its classic films, exciting theme park resorts, cutting-edge ride technologies, and immersive entertainment that truly offers something for everyone. The company is also known, however, for being highly litigious, which is somewhat understandable as the company owns dozens of intellectual properties, has a presence around the globe, and has been around for 100 years. Perhaps it comes with the territory.Disney also seems to have a talent for walking away from lawsuits, usually without a scratch. Oftentimes the company settles out of court when complaints are formally filed against the company, whether by Guests of Disney’s theme park resorts, consumers of the company’s products, or individuals employed by the company. But this week, the House of Mouse was dealt a huge blow in a lawsuit filed years ago, and this time, Disney may not be able to walk away unscathed.

A Suit Filed Against Disney in 2012

In the U.S. Supreme Court case, No. 22-347, Diece-Lisa Industries Inc v. Disney Store USA LLC, the plaintiff alleges that Disney violated her trademark rights with the creation of the villain in PIXAR’s Toy Story 3 (2010)–a pink, strawberry-scented teddy bear named Lots-o’-Huggin’ Bear. In 1994, the plaintiff, a toy developer and owner of a toy company with headquarters in New Jersey, developed a stuffed animal with sleeves that simulated a hug from an animal. The plaintiff’s company, Diece-Lisa Industries, owns the intellectual property rights for the wearable toy, affectionately named “Lots of Hugs Bear.”

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Credit: PIXAR Animation Studios

Following the box office release of Toy Story 3 (2010), the plaintiff sued Disney, alleging that PIXAR’s Lots-o’-Huggin’ Bear, as well as Disney’s toys based on the film’s strawberry-scented villain, closely resemble Diece-Lisa Industries’ Lots of Hugs bear, and infringed on the company’s trademark in the name “Lots of Hugs.”

Toy Story 3 is the third of four installments in PIXAR’s Toy Story franchise. It’s also the second most successful film in the franchise, grossing more than $1.06 billion at the box office, nearly doubling box office returns on Toy Story 2 (1999). It also won the Academy Award for best animated feature film. Altogether, the four Toy Story films have amassed more than $3.3 billion in revenue, making the series about a young boy and his toys the 20th highest-grossing film franchise worldwide and the third highest-grossing animated franchise worldwide.

Woody and Jessie in “Toy Story 2″/Credit: PIXAR Animation Studios

The Plaintiff Behind the Complaint

While the plaintiff listed on the complaint isn’t a huge entity or a rival entertainment mega-conglomerate, her resume includes numerous accomplishments, inventions, and concepts that have been picked up by entertainment entities on their way to the consumer marketplace. Randice-Lisa “Randi” Altschul is a toy developer and inventor based in New Jersey who–with very little technical training or engineering know-how–has developed board games, video games, and toys that have enjoyed massive success. Because of the success of her concepts and inventions, Altschul became a millionaire in her mid-20s.

In 1994, Altschul created the “Lots of Hugs” bear and owns the rights to the stuffed animal and the bear’s name.

Previous & Future Rulings

In 2021, Los Angeles-based U. S. District Judge Terry Hatter ruled in favor of Disney, citing First Amendment protections, and a year later, the San Francisco-based 9th U. S. Circuit Court of Appeals upheld Judge Hatter’s ruling. Earlier this week, however, the United States Supreme Court ruled that Disney must face the lawsuit, throwing out the lower courts’ rulings that The Walt Disney Company was protected from the suit on the basis of the Constitution’s First Amendment protections for the freedom of speech.

On June 8, the Supreme Court ruled on a suit involving Jack Daniel’s and a dispute about a chew toy for dogs that resembled the distinctive Jack Daniel’s whiskey bottle. Justices ruled in favor of Jack Daniel’s in the case, and that ruling prompted the Supreme Court to ask the 9th U.S. Circuit Court of Appeals to reconsider Diece-Lisa’s case against the entertainment giant.

Lotso in “Toy Story 3″/Credit: PIXAR Animation Studios

Previous rulings in the case failed to show that Disney had not copied the name and likeness of the character in Toy Story 3.

Should the 9th U.S. Circuit Court of Appeals rule in favor of Diece-Lisa Industries, it could mean that Disney owes license fees, as well as royalties from the films as well as from the toys inspired by the stuffed bear.