Disney sent cease and desist letter to Character.AI over copyrighted characters (www.cnbc.com)

Disney sent a cease-and-desist to Character.AI last week demanding the startup stop hosting or simulating Disney’s copyrighted characters without authorization. Character.AI — a platform where users build and chat with character-based bots — said it removed the named characters and that some bots are original while others are “inspired by” existing IP. The company has positioned itself to partner with rights holders (and struck a high-profile $2.7 billion licensing/talent deal with Google in 2024), but this notice follows Disney’s broader IP enforcement push, including a separate lawsuit against image generator Midjourney. The dispute highlights growing legal and product risks for AI firms that enable character emulation: copyright owners are testing enforcement strategies around generative chat and image models, and judges are already weighing large settlements (Anthropic preliminarily offered $1.5 billion in an authors’ suit). Practically, platforms face trade-offs between open user creativity and rights-compliant controls — from takedowns and stricter content filters to paid licensing partnerships and access controls for trained models. For developers and researchers, the case underscores the need to rethink model training data, provenance, and deployment policies when generative behavior reproduces recognizable, copyrighted characters.