Disney–OpenAI: What the $1B Licensing Deal Means for Creator IP
TORONTO, ON –
On December 11, 2025, Disney and OpenAI announced a three-year, $1 billion licensing deal that fundamentally redefines how IP holders negotiate with AI platforms. Starting in early 2026, the Sora video generation platform will host over 200 iconic characters from the Disney, Marvel, Pixar, and Star Wars universes, allowing users to create AI-generated content within a sanctioned, legitimate ecosystem.
For independent creators, this precedent signals an urgent shift: the era of ambiguous digital rights is over.
The question now is whether you'll negotiate proactively or be swept into a new legal framework that wasn't designed with you in mind.
Here's the Diverge Legal breakdown of what this partnership means for the creator economy in Canada and beyond.
Fair Use (in AI)
Legal defence used by tech companies claiming they can scrape copyrighted data for free to train AI LLMs.Disclaimer: Image created using generative AI
1. Fair Use Is No Longer the Default. Licensing Is.
For years, AI companies operated in a legal grey area, scraping copyrighted data under the defence of “fair use” (referred to as “fair dealing” in Canada) That landscape has fundamentally shifted.
In February 2025, a federal court ruled in Thomson Reuters v. Ross Intelligence that training AI on copyrighted work does not qualify as fair use when it directly competes with the original. More significantly, the U.S. Copyright Office released a comprehensive report in May 2025 stating that when “licensing options exist,” fair use claims become significantly weaker. The Office’s conclusion was unambiguous: voluntary licensing is now the expected framework.
Disney’s deal doesn’t just sidestep litigation. It establishes the market value of what unauthorized training of AI language models actually costs. By paying $1 billion for a three-year license, Disney and OpenAI have created a precedent that will be cited in every future dispute.
Courts will point to this deal and ask: if Disney negotiated a license, why shouldn't other creators?
The Conflict: Hours before announcing the OpenAI partnership on December 11, Disney sent a cease-and-desist letter to Google on December 10, demanding they immediately stop using Disney characters (Frozen, The Lion King, Moana, The Little Mermaid, and others) in AI outputs generated by tools like Vevo, Imagen, and Nano Banana. The letter demanded cessation of copying, displaying, distributing, and creating derivative works.
The Signal: Disney is drawing a bright line between authorized and unauthorized AI use. Google’s unauthorized outputs are infringement. OpenAI’s licensed outputs are legitimate business.
Google got served a cease-and-desist. OpenAI won a partnership.
2. The Union Backlash: Two Separate Battles
The creative unions’ response reveals that this deal raises two distinct legal concerns that require separate contractual protections.
THE WGA’S ARGUMENT
The Writers Guild of America responded immediately, stating the partnership “appears to sanction” OpenAI’s “theft of our work.” Their concern centres on the past. OpenAI’s models were trained on writers’ scripts and actors’ performances before this deal was negotiated. By paying now, Disney is effectively validating what was already done without permission. The WGA notes that Disney didn’t disclose whether OpenAI trained on WGA-covered material, and they’ve invoked their annual AI discussion requirement from the 2023 strike agreement to investigate further.
Although WGA’s leverage here is real, it’s limited. They’re arguing retroactive validation, which courts may view differently than prospective infringement.
SAG-AFTRA’S FOCUS
The actors’ union is addressing a different battlefield. SAG-AFTRA stated they’ve had “months of open discussions” with OpenAI and will “closely monitor” the deal to ensure compliance with hard-won protections regarding digital replicas. According to reporting, the agreement explicitly excludes talent likenesses and voices, meaning users cannot generate photorealistic versions of Robert Downey Jr. as Iron Man without separate negotiations.
This is a prospective protection. It matters because it validates a principle:
your face and voice (image and likeness) are separate IP rights from the character you portray, and they require distinct licensing.
Why Should You Care? Because, when you negotiate a 2026 contract, you face two separate risks:
Past-use risk (WGA concern): Will the brand use your existing work to train their internal AI models?
Future-replica risk (SAG-AFTRA concern): Can the brand create AI versions of you going forward?
Both need explicit contractual carve-outs. Don't assume one protects the other.
3. The “Likeness” Gap: A Temporary Win
The most critical clause for creators to scrutinize is what the Disney-OpenAI deal excludes.
According to reports, the agreement explicitly bars Sora from generating photorealistic digital replicas of actors, performers, or talent. Users cannot generate a new scene starring Robert Downey Jr. as Iron Man, or create deepfakes of recognizable performers, without separate negotiations and presumably additional compensation.
This validates what Diverge Legal has advocated for in every creator contract we’ve negotiated: your face, voice, and likeness are separate IP assets from the characters you portray. Disney owns the Iron Man character. It does not own Robert Downey Jr.’s digital human. The distinction is legally and commercially significant.
In Canada, this principle is increasingly recognized in union contracts. The latest ACTRA/CMPA Independent Production Agreement explicitly requires performers’ informed consent and compensation for AI-generated material and digital replicas. This is the emerging Canadian standard.
Unfortunately, Canada faces a federal gap. Unlike Denmark, which expanded copyright protections for digital likenesses, or the United States, where proposed legislation (the No Fakes Act) would create a federal right to sue for unauthorized digital likeness use for up to 70 years post-death, Canada has no comprehensive federal framework for digital personality rights. The Canadian Bar Association has advocated for a federal tort of appropriation of personality to fill this void, but that legislation doesn’t exist yet.
This means Canadian creators without union backing are more vulnerable than their U.S. and EU counterparts.
You cannot rely on a federal safety net. You must negotiate it individually, clause by clause.
4. You're Not the First (But You Could Be the Last) to Negotiate for Free
The Disney deal is not an anomaly. It’s a watershed moment in a rapidly consolidating market.
As of mid-2025, approximately 83 known commercial licensing agreements between content creators and AI companies have been documented.
The market itself is accelerating: the AI training data licensing sector is projected to grow from $2.68 billion in 2024 to $11.16 billion by 2030 (a 22% compound annual growth rate).
What changed this trajectory? Two things:
Legal Precedent: In October 2025, a major AI company reached a $1.5 billion settlement with authors’ groups, establishing that licensing is not optional — it’s a market expectation. Courts and regulators view unauthorized training as a liability, not a grey area.
Regulatory Pressure: The EU’s AI Act (effective August 2025) requires companies to disclose training data provenance. This transparency requirement has forced AI platforms toward legitimate licensing. Canada’s creative industry is now pushing Parliament to adopt similar transparency requirements, which would make a domestic licensing framework inevitable.
The Bottom Line: Every major platform is now negotiating with rights holders. At Diverge Legal, we’ve doing this for years. The creators who move first will negotiate from strength. The creators who wait will negotiate from desperation, or not at all.
5. What Does This Mean for Independent Creators?
For creators without Disney’s resources, the implication is clear: you cannot assume AI companies will ask permission. You must demand it contractually. So, if you’re negotiating a brand deal, sponsorship, or content partnership in 2026, assume the old rules don’t apply.
Keep an eye out for our new article setting out six contractual protections that are now table stakes (coming soon).
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The Bottom Line?
Your Digital Twin Is Now a Tradable Asset…
We are entering an era where your “digital twin” (your likeness, voice, and performance characteristics in synthetic form) is as valuable as your physical work. Disney just put a $1 billion price tag on the concept of authorized AI.
Make sure you aren’t giving yours away for free.
The creative economy is reorganizing around a simple principle: if your work has value, your permission has a price. The Disney-OpenAI deal proves this principle at scale. The next step is ensuring it applies to you.
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Your creative work is your leverage.
In this rapidly changing digital era, your standard contract is obsolete before the ink dries. For a review of your specific contracts or negotiation of AI-related protections, contact Diverge Legal.
Need help understanding the intricate contracts that govern your creative work, or want to build a strategy for IP protection? Diverge Legal is here to help.
If you’re ready for representation that understands the difference between a data point and your dream, contact Diverge today.
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Whether you’re an established influencer or an emerging creator, Diverge is here to help you focus on what you do best, while we take care of the legal complexities.
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Important Notice: The information in this article is provided for general informational purposes only and is not intended as legal advice. Reading this content does not create a lawyer-client relationship. Always seek professional legal counsel tailored to your specific situation. No part of this article may be reproduced or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in any retrieval system of any nature, without the express written permission of Diverge Legal.
