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Supreme Court Revives Toy Inventor's Trademark Dispute Over 'Toy Story 3' Character

In a turn of events, Disney is forced to confront a trademark infringement lawsuit linked to its beloved character, Lots-o'-Huggin' Bear, from the blockbuster film, "Toy Story 3."

Disney logo in the lens
Disney logo in the lens

Court's Verdict: Back to Square One for Disney

The US Supreme Court invalidated a lower court's decision, demanding Disney address a lawsuit filed by New Jersey-based toy inventor, Randice-Lisa Altschul. She alleges that Disney infringed upon her trademark rights with the character Lots-o'-Huggin' Bear from the smash-hit 2010 movie, "Toy Story 3." The Court dismissed the previous judgment that had safeguarded Disney from Altschul's lawsuit, citing the U.S. Constitution's First Amendment protections for freedom of speech.

Intellectual Property and Free Speech: A Complex Intersection

In recent years, the Supreme Court has faced challenging situations related to trademark law and free speech. Notably, this includes their June 8 decision in favor of Jack Daniel's, over a dispute regarding a dog chew toy designed to mirror the company's recognizable whiskey bottles. In light of that verdict, the high court instructed the 9th U.S. Circuit Court of Appeals to review Diece-Lisa's case.

The Battle of the Bears: 'Lots of Hugs' vs 'Lots-o'-Huggin'

Altschul's invention, a stuffed animal dating back to 1994, featured sleeves designed to mimic an animal's hug. Her company, Diece-Lisa Industries, holds the intellectual property rights for the Lots of Hugs bear. In 2012, the company sued Disney, arguing that Lots-o'-Huggin' Bear and related Disney toys infringed upon their trademark, specifically the "Lots of Hugs" name. The character, also known as Lotso, served as the antagonist in the Oscar-winning film, "Toy Story 3," which grossed over a billion dollars globally.

Previous Court Decisions Favor Disney

Previously, Los Angeles-based U.S. District Judge Terry Hatter had sided with Disney in 2021, invoking First Amendment protections. The San Francisco-based 9th U.S. Circuit Court of Appeals confirmed Hatter's ruling in 2022.

Altschul's firm argued before the Supreme Court that Disney should not have received protection under a legal provision known as the Rogers test. This mechanism has typically permitted artists to use trademarks without consent, provided their usage is artistically relevant and does not intentionally mislead consumers. Diece-Lisa claimed the 9th Circuit's verdict inappropriately broadened the Rogers test beyond its original intent to safeguard "culturally significant" marks and artistic work titles.

Supreme Court Tightens the Reins

In a recent ruling, the Supreme Court imposed stricter guidelines on the Rogers test when it determined that the First Amendment did not shield a "Bad Spaniels" chew toy that lampooned Jack Daniel's branding. The current case, Diece-Lisa Industries Inc v. Disney Store USA LLC, U.S. Supreme Court, No. 22-347, is seen as the latest legal battle testing these guidelines.