Business
Disney and Universal Sue A.I. Firm Midjourney for Copyright Infringement
Disney and Universal sued a prominent artificial intelligence start-up for copyright infringement on Wednesday, bringing Hollywood belatedly into the increasingly intense battle over generative A.I.
The movie companies sued Midjourney, an A.I. image generator that has tens of millions of registered users. The 110-page lawsuit contends that Midjourney “helped itself to countless” copyrighted works to train its software, which allows people to create images (and soon videos) that “blatantly incorporate and copy Disney’s and Universal’s famous characters.”
“Midjourney is the quintessential copyright free-rider and a bottomless pit of plagiarism,” the companies said in the lawsuit, which was filed in U.S. District Court in Los Angeles.
Midjourney did not respond to requests for comment.
A.I. start-ups like Midjourney, which was introduced in 2022, train their software with data scraped from the internet and elsewhere, often without compensating creators. The practice has resulted in lawsuits from authors, artists, record labels and news organizations, among others. (The New York Times has sued OpenAI and its partner, Microsoft, for copyright infringement. OpenAI and Microsoft have denied those claims, saying their actions fall under “fair use.”)
But Disney and Universal are the first major Hollywood studios to file copyright infringement lawsuits.
Creative workers in the entertainment capital have been increasingly frustrated about studio silence on the matter. “They have not protested the theft of this copyrighted material by the A.I. companies, and it’s a capitulation on their part to still be on the sidelines,” Meredith Stiehm, president of the Writers Guild of America West, told The Los Angeles Times in February.
The Midjourney lawsuit indicates that Disney and Universal, the two most powerful traditional entertainment companies, have been biding their time. While taking detailed aim at Midjourney for infringing on prominent characters like Darth Vader, the Minions, the “Frozen” princesses, Shrek and Homer Simpson, the lawsuit reads like a shot across the bow to A.I. companies in general.
The studios framed the generative A.I. theft as a problem that “threatens to upend the bedrock incentives of U.S. copyright law that drive American leadership in movies, television and other creative arts.” The U.S. film and television business supports 2.3 million jobs and pays $229 billion in annual wages, according to the most recent economic figures from the Motion Picture Association, a Hollywood lobbying group.
“We are bullish on the promise of A.I. technology and optimistic about how it can be used responsibly as a tool to further human creativity,” Horacio Gutierrez, Disney’s general counsel, said in an email. “But piracy is piracy, and the fact that it’s done by an A.I. company does not make it any less infringing.”
Kim Harris, general counsel of NBCUniversal, which includes the Universal movie studio, said in a separate email: “We are bringing this action today to protect the hard work of all the artists whose work entertains and inspires us and the significant investment we make in our content.”
Disney sent Midjourney a “cease and desist” notice last year, and the A.I. firm did not respond aside from acknowledging receipt, according to the lawsuit. Universal sent a similar notice last month and has not received a response of any kind.
The suit asks for Midjourney to pay damages, but does not include an exact monetary demand. Disney and Universal also want a judge to stop Midjourney from “offering its forthcoming video service without appropriate copyright protection measures.”
Midjourney is one of the most popular text-to-image generators: Users type a description of what they want to see and the bot spits back images seconds later. (Competitors include Stability AI and DALL-E, developed by OpenAI.) Midjourney sells subscriptions for monthly fees ranging from $10 for a basic plan to $120 for a “mega” one, depending on the processing speed, among other factors. It had roughly $300 million in revenue last year, up from $50 million in 2022.
Midjourney has been in the news for at least a year and a half for generating vivid images of copyrighted material. The New York Times reported in February 2024, for instance, that typing “animated toys” into Midjourney resulted in near-exact images of Buzz Lightyear and other characters from “Toy Story,” a movie made by Pixar, which is owned by Disney.
Business
Ranch lovers can soon travel with a TSA-friendly kit of the popular American dressing
Ranch dressing is having a moment thanks to the World Cup and Kraft is ready to meet it.
The company said Thursday that it is working on a “TSA Compliant Ranch” for those looking to travel with the quintessentially American condiment. The announcement follows the influx of social media videos showing international soccer fans sampling the dressing for the first time.
“Some visitors leave with souvenirs. Others leave with America’s favorite dressing,” Kraft wrote in a caption accompanying an AI image of a TSA-approved clear bag packed with ranch dressing packets posted to social media. The image showed the bag — complete with a luggage tag resembling a ranch dressing bottle — placed in an airport security screening bin along with other travel essentials.
Additional details will be announced later, the company said.
TSA has also leaned into ranch’s apparent newfound popularity among international travelers, providing some helpful tips (and warnings) on social media.
“If you’re visiting for a very large sporting event & you happen to discover RANCH while you’re here… pls pack it in your CHECKED BAG on your way home,” the agency posted on Instagram Tuesday. It also asked travelers to “avoid chugging your ranch outside security” lines.
“Who knew dip-lomacy could be achieved through addressing the obvious: ranch is the king of condiments,” TSA wrote in the caption accompanying its carousel of humorous ranch-related quips. “If you’re traveling within the U.S., make sure to keep your carry-on sauces to 3.4 oz or less and place any larger containers in your checked bags.”
“Some heroes wear capes. Others bring ranch,” it added.
According to 1987 Times reports, ranch dressing was invented by Steve Henson, who opened the Hidden Valley Guest Ranch in Santa Barbara in the mid-1950s with his wife, Gayle. The unnamed condiment originally mixed herbs and spices with buttermilk and mayonnaise and its popularity with guests led to it being jarred so they could take some home. The more travel-friendly powdered form followed.
Business
Landmark downtown apartment tower faces foreclosure
A landmarked downtown Los Angeles apartment building designed by famed Los Angeles architect John Parkinson is on the market as its owners face foreclosure.
Residences in the Metropolitan, a 10-story tower built in 1913, are nearly filled with tenants but its ground floor retail spaces on Broadway and 5th Street are unoccupied, as are other street-level stores in downtown’s Historic Core.
The historic building was once considered one of the best in the city and is owned by the Fallas family, which operated a chain of value-priced clothing stores based in Gardena including one called Fallas Paredes in the Metropolitan.
Fallas-Paredes at 449 S. Broadway, Los Angeles, CA 90013.
(Google Maps)
Around 2011, Michael Fallas, who once worked in family’s downtown store as a stock boy, converted the upstairs floors from offices to apartments while continuing to operate Fallas Paredes. The store closed more than five years ago in the wake of a 2018 filing by its parent company for Chapter 11 bankruptcy protection.
Earlier this month in state Superior Court, a special servicer representing Fallas’ lender asked for a judicial foreclosure of the property, alleging that Fallas had stopped making payments on a $32 million loan dating to 2017. After leasing the property for years, Fallas bought the building in the 1990s.
Fallas didn’t respond to requests for comment.
The location of the Metropolitan where the buildings stands was hailed in a Times story in 1912, saying “it is regarded by many realty men as the most valuable piece of real estate in Los Angeles.”
The building today is recognized as a city historic-cultural monument because “Broadway became the commercial center of the Southland, a title it retained until well after World War II,” with its development, the city said. One of the architects who designed the Metropolitan in the Beaux-Arts style was John Parkinson, who is credited with designing such well-known local structures as City Hall, the Los Angeles Memorial Coliseum and Union Station.
Notable tenants in the Metropolitan have included the Los Angeles Public Library, Owl Drug Co., variety store J.J. Newberry and real estate company Janns Investment Co., which sold the land where UCLA is built and developed Westwood Village, among other Los Angeles neighborhoods.
In recent years, the buildings around the Metropolitan have struggled to keep retail tenants after a spurt of residential conversions of historic buildings starting in the early 2000s brought commerce to the neighborhood. Many downtown businesses have struggled since the pandemic reduced occupancy in offices downtown and reduced the flow of visitors.
“The lack of bodies on the street is generally hurting downtown, and that’s one of the reasons that has building has problems,” said downtown real estate broker Hal Bastian, who lives in the Historic Core.
There are close to 1,000 residential units in historic buildings at the intersection of Broadway and 5th Street, Bastian said, but all the ground floor stores are closed. Drug stores there suffered substantial losses from shoplifting he said, and now, “our challenge on Broadway is leasing.”
The 88 apartments in the Metropolitan are 91% rented, according to a listing for the property by the Zacuto Group, which also touts its roof deck with pool, fitness center and barbecue grills. No sale price is set.
Business
January 2025 wildfire victims seek tougher penalties against State Farm over claims handling
A fire survivors’ group announced Thursday it was seeking tougher penalties against State Farm over its handling of January 2025 wildfire claims.
The Every Fire Survivor’s Network said it was petitioning to join a state enforcement action announced this year against the company to make sure the case results in meaningful changes at California’s largest home insurer.
“We’re seeking a systematic review of all their claims and penalties calibrated to the actual scale of the harm — and we’re seeking the payouts that families are owed,” said Joy Chen, executive director of the group, at a Pacific Palisades news conference joined by victims of the fires.
The Department of Insurance in May filed an administrative action against State Farm General — the subsidiary of the giant Bloomington, Ill., insurer that handles California home insurance — after completing a “market conduct” exam.
The Jan. 7, 2025, fire damaged or destroyed more than 18,000 structures and killed 31 people.
State Farm has received more January 2025 claims than any other insurer — more than 13,700 auto and homeowners claims as of May 4, with payouts totaling $5.7 billion, according to the company.
The market conduct exam looked at 220 sample claims filed by the victims and found 398 violations of state law in about half of them.
Among other alleged violations, it found that the company failed in numerous cases to pursue a “thorough, fair and objective investigation” into claims, failed to come to “prompt, fair, and equitable settlements” and made settlement offers that were “unreasonably low.”
In announcing the action, Insurance Commissioner Ricardo Lara called the company’s claims handling “unacceptable” and said his department was taking “decisive action to hold them accountable.”
The state is seeking a “cease and desist” order to stop the insurer from engaging in unfair or deceptive practices.
It also has threatened to suspend State Farm’s license over the alleged violations, which each carry a penalty of up to $5,000 — or twice that figure if found to be willful. That could amount to a penalty of $2 million or more.
The threat to actually suspend State Farm’s license and its authority to write policies has been viewed skeptically by some, given its roughly 20% market share of the state’s home insurance market.
The company, which had an opportunity to include its responses in the exam report, denied fault in some cases and admitted fault in others. It often blamed problems on individual adjusters and denied systemic issues with its claims handling.
The petition filed by the wildfire survivor’s group criticizes the sample size of the market conduct exam as too small to capture all the alleged deficiencies in State Farm’s claims handling, which it claims are a “general business practice” of the company.
The group is seeking to conduct discovery, cross examine witnesses, present testimony from fire victims and bring more that 1,600 firsthand policyholder statements regarding State Farm’s practices into evidence, according to the petition.
It also wants State Farm to reopen cases in which claimants were paid too little, and it is seeking to participate in settlement discussions in order to increase any penalty State Farm would pay.
It calculated that a $2-million penalty would amount to a minute fraction of the assets of the State Farm Group.
“I submit to you that doesn’t defer bad conduct, it just allows you to continue to do it,” said Michelle Meyers, an attorney for Every Fire Survivor’s Network, at the news conference.
Consumer Watchdog, which has been a harsh critic of State Farm, also is providing legal support for victims’ effort.
Sevag Sarkissian, a spokesperson for State Farm, said the company was aware of the petition.
“We recognize that many wildfire survivors, including those that are State Farm General policyholders, continue to face difficult recovery challenges,” he said. “Our focus remains on helping customers recover.”
Michael Soller, a spokesperson for Lara, said the department is “acting with urgency to assist wildfire survivors in their ongoing recovery by investigating formal complaints filed by survivors and conducting the expedited market conduct exam that led to this enforcement action.”
He added that the department’s position is the state’s Administrative Procedure Act does not contemplate the commissioner or department staff authorizing intervention requests in the case.
He said that would be a hearing officer’s or administrative law judge’s decision when one is assigned to the case.
Meyers acknowledged the request was novel but said her reading of the law is that Lara can make the decision because no judge is yet assigned.
In response to the criticism, State Farm pledged earlier this year to improve its claims handling, including by providing single points of contact and improved communication so there are “fewer handoffs, fewer repeated explanations, and seamless support.”
It also named a new vice president of customer relations for State Farm General.
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