Disney Risks Losing Copyright Protection on Some of Its Most Iconic and Lucrative Characters

Few would dispute that the success of Disney (NYSE: DIS) is the result of the company's large and ever-growing treasure trove of intellectual property. With the introduction of Steamboat Willie in 1928 -- the first film starring Mickey Mouse -- Disney has amassed a massive catalog of characters that is the envy of media companies everywhere.

However, as we close in on the end of 2021, the House of Mouse is at risk of losing control of some of the company's most beloved characters, which are scheduled to enter the public domain in the coming year.

A bronze statue of Walt Disney and Mickey Mouse at Disneyland.

Image source: Disney.

Oh, bother!

Of all the characters in the Disney archive, those that appeared in the seminal Winnie-the-Pooh books by A.A. Milne are among the most cherished. The characters were based on Milne's son Christopher Robin and his stuffed animals, including Winnie the Pooh, Eeyore, Tigger, Piglet, Kanga, and Roo.

These iconic stories and characters are woven into the tapestry of Disney's success, delighting generations of fans in the process. But the sun is setting on copyright protection for the earliest of the stories, which first appeared in 1926. Disney could lose control of the characters in 2022.

The Mickey Mouse Protection Act

U.S. copyright law is generally limited to the life of the author plus an additional 70 years. There are, of course, exceptions. The Copyright Term Extension Act of 1998 addresses when a creation is a "work for hire," which protects a company's copyright for 95 years from first publication or 120 years after its creation, whichever ends sooner.

This extension came into being after Disney successfully lobbied Congress and has been dubbed "The Mickey Mouse Protection Act" after numerous campaigns to protect one of the world's most recognizable characters.

Mickey and Minnie dressed in their holiday best.

Image source: Disney.

One of Disney's biggest moneymakers

Disney acquired the rights to the Winnie-the-Pooh books and their characters from Milne's estate back in 1961 and has spun them into a multibillion-dollar industry. Investors might be surprised to find that Winnie the Pooh and friends are among the most lucrative in Disney's catalog.

Winnie the Pooh is, in fact, among the most valuable media franchises in the world, having accumulated revenues of more than $80 billion over the years, putting it neck-and-neck with Mickey Mouse. While estimates vary, some believe that Disney currently generates annual revenue of between $3 billion and $6 billion from Pooh and friends.

All is not lost

It's important to note a few important legal distinctions. Beginning in 2022, Disney won't be able to sue anyone that uses A.A. Milne's original Winnie-the-Pooh stories as inspiration, adapting the fictional bear for new projects or original creative works. The original line drawings from the book, penned by E.H. Shepard, will also be fair game.

Disney can, however, go after anyone that tries to use Disney's version of Winnie the Pooh and the trademarked characters it created based on Milne's stories. The House of Mouse also maintains the rights to Milne's books and characters created after 1926, including Tigger, who first appeared in 1928.

There's also the potential that Disney could once again try to extend the copyright on Winnie the Pooh, though many legal experts believe that would be a long shot.

This wouldn't be the first time Disney sought to revise the rules regarding copyrighted characters and how the company proceeds could have important implications for the company's future. Copyright protections are currently set to expire for Steamboat Willie -- the earliest version of Mickey Mouse -- two years from now.

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Danny Vena owns Walt Disney. The Motley Fool owns and recommends Walt Disney. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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