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District court holds that “Moodsters” characters created by child-development expert and allegedly copied in Disney’s animated film “Inside Out” were not sufficiently delineated or distinctive to be entitled to copyright protection, rejecting application of “story being told” standard for character copyrightability as defunct and dismissing new allegations as insufficient.

Plaintiff Denise Daniels, a child-development expert who has appeared on national television, and her company The Moodsters Co. brought claims for copyright infringement and breach of implied-in-fact contract against The Walt Disney Co., Pixar and others involved in the production of the Oscar-winning animated feature film “Inside Out.” Plaintiffs alleged that the film infringed their copyrights in four characters and in the ensemble of characters found in a “bible” for a proposed animated television show titled “The Moodsters” and a pilot episode posted to YouTube. Plaintiffs’ Moodsters are color-coded anthropomorphic characters, each representing a single emotion — for example, happiness (yellow), sadness (blue), anger (red) and fear (green). Plaintiffs contended that the use of similar color-coded characters in “Inside Out,” also named for various emotions, infringed their copyrights in the Moodsters.

In January 2018, the district court dismissed plaintiffs’ amended complaint but granted them leave to replead their copyright infringement claims. (See our summary here.) Following the filing of a second amended complaint, Disney again moved to dismiss, and the district court granted that motion. According to the court, plaintiffs’ newly amended claims did not plausibly allege that the Moodsters were independently copyrightable under the Ninth Circuit’s three-part test in DC Comics v. Towle, which requires that a character (1) have physical as well as conceptual qualities, (2) be sufficiently delineated to be recognizable as the same character whenever it appears, and (3) be especially distinctive and contain some unique elements of expression.

While the parties agreed that the first element of the test was satisfied, Disney argued — and the court agreed — that the second and third elements were not. As to the second factor, plaintiffs added new allegations regarding a “second generation” of Moodsters developed in 2012 to 2013, which, they argued, demonstrated that the characters’ traits and attributes persisted over time and made them recognizable. The court disagreed, concluding that changes to the Moodsters’ appearance and biographies undermined plaintiffs’ argument that they were “sufficiently delineated.” For example, the court noted, the second generation of Moodsters had different names than those appearing in the bible and pilot episode. Furthermore, although the first generation of Moodsters lived in a world called Moodsterville with geographic landmarks, the second generation of characters lived under a magician’s top hat. The characters underwent physical changes from the first to the second generation. While the first generation resembled aliens or insects with long, skinny bodies, the second generation were plump and round, resembling soft teddy bears. Comparing the Moodsters to characters previously recognized as independently copyrightable, the court stated: “The inclusion in the amended complaint of the second generation characters . . . demonstrates that the majority of the characters’ traits, including such basic qualities as their names, are fluid. The underlying traits that remain the same do not give rise to the instant recognition enjoyed by James Bond or Godzilla.”

Even if the second-generation characters did render the Moodsters “sufficiently delineated,” the court held, those characters would become independently copyrightable only when they displayed consistent, widely identifiable traits, i.e., after the second-generation characters were created. In that case, the court concluded, the first-generation Moodsters in the bible and pilot would not retroactively become protectable and would not have been subject to copyright at the time of the alleged infringement.

As to the third factor, plaintiffs argued that a purportedly labor-intensive development process for each character demonstrated those characters were “especially distinctive.” Plaintiffs claimed to have developed the characters in conjunction with emotional intelligence experts, who advised them on facial expressions, and using focus groups of leading professors at Yale. However, the court concluded that this process had no impact on whether the characters as “finished products” were sufficiently distinctive vis-a-vis other characters. Thus the court held that plaintiffs’ new allegations did not satisfy the three-part Towle test.

Finally, plaintiffs argued that the Moodsters ensemble of characters was copyrightable under the “story being told” standard, pursuant to which characters are protectable where they constitute the story being told and are not mere chessmen in the game of telling the story. As plaintiffs argued, “The Moodsters only exists because of The Moodsters characters.” The court, however, held that the “story being told” standard no longer applied following the Ninth Circuit’s decision in DC Comics v. Towle. Even before Towle, the court stated, the “story being told” standard did not apply to visually depicted, as opposed to literary, characters. In sum, “after Towle, copyright in graphically depicted characters is available only for characters that are especially distinctive” and “[t]o meet this standard, a character must be sufficiently delineated and display consistent, widely identifiable traits.” The Moodsters, the court held, did not meet this standard.