What happened

Disney sent a cease-and-desist letter to Character.AI, alleging that the startup trained its AI on Disney's copyrighted works and created interactive chatbots representing characters from Disney, Pixar, Star Wars, and Marvel franchises without authorisation, thereby infringing its intellectual property.

The letter claims these actions mislead consumers, especially children, into believing Disney endorses these chatbots. It also raised concerns that some of these chatbots have exhibited harmful behaviours, including the sexual exploitation and emotional manipulation of children, damaging its brand.

“Disney will not allow your company to hijack its characters, damage its brands, or infringe its copyrights and/or trademarks. Character.ai’s conduct is egregious and must stop immediately,” the letter said.

Why it happened

Character.AI appears to think it could use Disney’s protected characters without licensing or permission, training its models on copyrighted materials. 

The company did so in an opaque and underhand manner in order to make money from third parties, including Disney, in an unethical and potentially illegal manner, and to minimise its own legal and reputational accountability.