The AI Copyright Battle Takes an Unexpected Turn

TechCrunch reports that AI startup Midjourney is pushing Hollywood studios to disclose how they use artificial intelligence themselves. The move comes as part of an ongoing legal fight where Disney, Universal, and Warner Bros. have sued Midjourney for allegedly copying their copyrighted characters.

What makes this development significant is the argument behind it. Midjourney claims the studios may be doing exactly what they accuse the startup of doing — training AI models on unlicensed content for internal projects. If true, this would expose a double standard that could reshape how copyright law applies to AI.

Why This Legal Move Matters for Everyone Using AI

At its core, this dispute is about fairness and transparency. Midjourney wants the studios to hand over documentation showing how they train their own AI systems, including any use of copyrighted material for storyboarding or idea generation. The startup argues that if the studios also rely on unlicensed content internally, it becomes an industry practice rather than a violation.

This line of thinking has broad implications. It challenges the idea that big companies can sue smaller AI developers for the same behaviour they practice behind closed doors. For any business using generative AI, the case highlights how uncertain the ground rules still are. No one knows for sure what counts as fair use when training models on existing content.

What This Means for Australian SMBs

Australian small and mid-sized businesses are increasingly turning to AI tools for content creation, marketing, and product design. But these tools learn from vast datasets that often include copyrighted material. The Midjourney case shows that even major studios cannot agree on what is acceptable.

For local businesses, the key takeaway is caution. If a large AI company can be sued for generating an image of Bart Simpson, any business using similar tools could face legal risk — especially if they share or sell the output. Australian copyright law is not identical to US law, but the trend toward stricter enforcement is clear.

What You Can Do Now

  • Review your current AI usage policies to understand what data your tools are trained on. Ask your providers for transparency about their training sources.
  • Document every piece of content you feed into AI systems, including images, text, and video. Keep records of where it came from and whether you have permission to use it.
  • Stick with licensed or internally created content when training custom AI models. Avoid scraping public internet images without clear rights.
  • Stay updated on Australian legal developments around AI and copyright. The laws are still evolving, and early awareness can prevent expensive mistakes.
  • Consult with technology advisors who understand both AI tools and compliance. A quick check now is cheaper than a legal dispute later.

MS&VG helps Australian SMBs navigate digital transformation with practical advice on AI adoption, risk management, and compliance. Our team monitors legal trends so you can focus on growing your business safely.