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IP/Entertainment Case Law Updates

Daniels v. The Walt Disney Company

Ninth Circuit affirms dismissal of claims against Disney arising from film Inside Out, holding that plaintiffs’ characters called “The Moodsters” were not entitled to copyright protection because of lack of consistent, identifiable character traits and attributes, and plaintiffs’ failure to plead either that Disney made express offer to pay for The Moodsters or that Disney accepted plaintiffs’ pitch of The Moodsters with implied expectation of payment for use precluded plaintiffs’ claim for breach of implied-in-fact contract.  

Denise Daniels, an expert on children’s emotional intelligence and development, developed “The Moodsters,” five color-coded anthropomorphic characters, each representing a different emotion. Daniels and her company, The Moodsters Company, published a “bible” for The Moodsters in 2005, which they used as a pitch book to media and entertainment companies, and in 2007 posted on YouTube a pilot episode depicting the characters. Among the companies to which Daniels pitched The Moodsters was Disney, which, in 2015, released the film Inside Out, which centers on five anthropomorphized emotions that live inside the mind of an 11-year-old girl.

Daniels and her company filed suit against Disney, alleging copyright infringement of both the individual Moodsters characters and the ensemble of characters as a whole, as well as breach of an implied-in-fact contract arising from Disney’s failure to compensate plaintiffs for material that Disney allegedly obtained from them. The district court granted Disney’s motion to dismiss, finding that plaintiffs failed to demonstrate that The Moodsters met the standard for copyright in a character and that plaintiffs’ publication of a pitch book and a pilot episode containing the characters precluded a claim for breach of an implied-in-fact contract under California law. (Read our summary of the district court’s decision here.) 

On appeal, the Ninth Circuit panel affirmed the district court’s application of the tripartite DC Comics v. Towle standard for the copyrightability of graphically depicted characters, which extends copyright protection to a character that (1) has “physical as well as conceptual qualities”; (2) is “sufficiently delineated to be recognizable as the same character whenever it appears” and “display[s] consistent, identifiable character traits and attributes”; and (3) is “especially distinctive” and “contain[s] some unique elements of expression.”  

On appeal, Disney did not dispute that The Moodsters, which contained physical as well as conceptual qualities, met the first prong of the Towle test. After applying the Towle test, the court found that the latter two prongs weighed in favor of dismissal. 

The court contrasted The Moodsters with consistently recognizable characters and graphic depictions that meet the test, such as Godzilla, James Bond or the Batmobile, whose physical characteristics may change over various iterations but who maintain consistent and identifiable appearances, traits and attributes across various productions and adaptations. Unlike those characters, The Moodsters’ physical appearance changed significantly over time—from an initial insect-like appearance, with skinny bodies, long ears and tall antennas—to a later appearance as small bears, wearing a detective’s hat and small cape. In addition, other than the idea of color and emotions, there are few other identifiable character traits and attributes that are consistent over the various iterations of The Moodsters, with each of the characters employing different reactions to stimuli and even going by different names across different iterations. As such, the court held that The Moodsters lack sufficient delineation since each individual Moodster lacks comparable, identifiable and consistent character traits and attributes across iterations beyond the emotion it represents. 

As to the third prong, the court affirmed the district court’s conclusion that The Moodsters were not distinctive, again contrasting The Moodsters with the Batmobile. Unlike the Batmobile, which had a unique and highly recognizable name, each of The Moodsters has had three entirely different names throughout its life span. The court rejected Daniels’ argument that The Moodsters are unique in that they each represent a single emotion, holding that this facet is not sufficient to render them “especially distinctive,” particularly given their otherwise generic attributes and character traits. 

Having held that The Moodsters failed the Towle analysis, the court next turned to plaintiffs’ argument that The Moodsters were protected under the story being told test, which extends copyright protection to characters that constitute the true story being told in a work. The story-being-told test is an alternative to the Towle test and may be considered in combination therewith. 

Nevertheless, the court held that The Moodsters did not satisfy the story-being-told test, because none of the published works depicting The Moodsters exhibited any prolonged engagement with character development, or a character study, of the characters. The court explained that the brief introductions and descriptions of the individual Moodsters in the “bible” and pilot episode were insufficient to constitute the true story being told therein. Rather, since each of The Moodsters served primarily as a means by which particular emotions are introduced and explored, they were “mere chessmen in the game of telling the story”—not the true story being told, and were thus not entitled to copyright protection.

The court also rejected plaintiffs’ alternative argument that The Moodsters, as an ensemble, were entitled to protection under either or both of the Towle or story-being-told tests. The court reasoned that the characters’ individual lack of distinctiveness and delineation cannot be cured by reference to the characters in the aggregate—and that the characters as an ensemble are no more copyrightable than the individual characters.

Finally, the court considered plaintiffs’ claim for breach of an implied-in-fact contract arising from their pitch of the concept behind The Moodsters to Disney, which Disney allegedly incorporated into the film Inside Out without compensating plaintiffs. The panel affirmed the district court’s dismissal of the implied-in-fact contract claim, citing plaintiffs’ failure to include sufficient detail to support the claim, including dates. Without this detail, there was no basis to conclude that Daniels’ disclosure of the idea behind The Moodsters was made under circumstances supporting the inference that Disney voluntarily accepted the disclosure with an expectation that it would have to compensate plaintiffs for use of the ideas contained therein. 

Summary prepared by Linna Chen and David Forrest