Ninth Circuit Strikes Cautionary Note for Studios in the AI Age in “Beast”-ly Decision

On September 11, 2025, beauty was in the eye of the copyright holder, as the Ninth Circuit reinstated a 2023 jury verdict finding Walt Disney Pictures (Disney) vicariously liable for its contractor’s copyright infringement of visual effects software during the production of Disney’s 2017 Beauty and the Beast film reboot. Reversing the district court’s post-verdict grant of judgment as a matter of law for Disney, the Circuit Court found the plaintiffs (Rearden) presented sufficient evidence at trial for the jury to find that Disney had control over the infringing conduct.

The court’s opinion reaffirms and further defines the contours of a defendant’s duty to guard against infringement over which it may have some control. With artificial intelligence (AI) becoming increasingly integrated into the entertainment and technology industries, the opinion underscores potential new challenges for studios and technology providers.

Vicarious Liability for use of MOVA technology in Beauty and the Beast

In March 2015, Disney contracted with non-party Digital Domain 3.0 (DD3) for visual effects work on its live-action version of Beauty and the Beast (BATB). During BATB’s production, DD3 used copyrighted facial capture technology called MOVA Contour Reality Capture (MOVA).

In July 2017, Rearden sued Disney, alleging contributory and vicarious copyright infringement. A month later, in a separate lawsuit, Rearden prevailed as the owner of MOVA. The district court granted Disney summary judgment on Rearden’s contributory claim due to lack of evidence of Disney’s actual or constructive knowledge of DD3’s infringement. In December 2023, after a two-week trial, a jury found Disney vicariously liable for DD3’s infringement of Rearden’s technology and the court entered an award of $250,638 in actual damages and $345,098 in Disney’s profits attributable to infringement. A win, but far from the more than $580,000 in actual damages and $38 million in Disney’s profits that Rearden had sought at trial.

To establish Disney’s liability for vicarious liability, Rearden had to prove control and financial gain. To establish control, a defendant must have “the [1] right and [2] ability to supervise the infringing conduct.” Rearden, LLC v. Walt Disney Pictures, ___ F. 4th.___, No. 24-3970, 2025 WL 2619138, at *5 (9th Cir. Sept. 11, 2025). Put differently, control “requires both a legal right to stop or limit the directly infringing conduct, as well as the practical ability to do so.” Id. (citation modified). However, after the jury verdict, the court granted judgment as a matter of law in favor of Disney, finding insufficient evidence that Disney had the practical ability to stop or limit DD3's infringing conduct.

The Ninth Circuit reversed, finding sufficient evidence to support the jury’s verdict. In so doing, the court rejected Disney’s arguments that:

1. It had “no practical ability to supervise all its BATB vendors and no specific reason to investigate DD3’s authorization to use MOVA”; and
2. “[E]ven if it had further investigated DD3’s right to use MOVA, it could not have recognized the use as infringement because the underlying MOVA ownership dispute was not resolved until after the final use of MOVA on BATB.”

First, the court concluded the evidence was sufficient for the jury to find that Disney had the practical ability to supervise DD3, noting that two Disney representatives “were physically present and actively participated in all MOVA capture sessions.” The court concluded that the question of whether control is impracticable is a “quintessential jury question.” In addition, it reiterated that “the defendant, not the copyright owner, bears the burden of affirmatively guarding against the infringement.” Rearden, 2025 WL 2619138, at *8 (citation modified).

Second, as no actual knowledge of infringement is required, the “mere fact that the copyright ownership dispute [over MOVA] was not definitively resolved until August 2017, after BATB was released, does not insulate Disney from liability.” The court noted that copyright infringement is a strict liability tort and that there were ways to guard against liability that Disney could have taken (due diligence inquiries and indemnity and insurance agreements). The court pointed out that Disney did have an indemnity agreement. Id. at *10.

In a second part of the opinion, the Court of Appeals held that—as a matter of first impression—the Copyright Act “does not provide a statutory jury trial right on the disgorgement of profits remedy.” Id. at *11.

Why it Matters: Control and VFX in the AI Age

With the rise of the use of AI in the entertainment and technology industries, whether studios and production companies might be held liable for secondary infringement based on vendors’ copyright infringement takes on heightened importance. Will those who use software that is later found to be infringing—such as the AI platforms at the center of numerous lawsuits across the film, music and literary industries—risk secondary liability in such situations?

While not a case about AI specifically, Rearden shows that the question of whether a defendant controls infringing conduct is highly fact-intensive—accordingly, it often requires discovery and is not resolved until the later stages of a lawsuit, including at trial. Therefore, how downstream users implement technology (including generative AI), their measure of control and whether they can contractually insulate themselves merits close attention.