IP Law Daily, COPYRIGHT—9th Cir.: Disney, in reversal, is vicariously liable for infringement by one of its visual effect providers, (Sep 12, 2025)

By Matthew Hersh, J.D.

Court also finds that there is no right to jury trial on disgorgement of profits.

A district court in California erred when it reversed a jury’s finding that Disney was vicariously liable for the copyright infringement committed by one its leading special effects vendors, the U.S. Court of Appeals for the Ninth Circuit has held. The court, in reversing the post-trial judgment and restoring the jury verdict, also decided as a “first impression” of law that the copyright owner who accused Disney of the infringement was not entitled a jury trial over the amount of Disney’s profits he was entitled to recoup in damages (Rearden, LLC v. Walt Disney Pictures, No. 24-3970 (9th Cir. Sept. 11, 2025)).

The lawsuit revolves around MOVA Contour Reality Capture, a facial motion capture system used to record acting performances and digitize facial motion. The technology, described in shorthand interchangeably as either MOVA or Contour, is popular in Hollywood because the underlying actor’s facial motions, once recorded and transformed into digital form, can then be altered and applied in almost countless ways. Sometimes they are used for “retargeting” the performer’s face onto another face—either a real face, such as the transformation of Ron Weasley into Harry Potter, or a fictional face, such Mark Ruffalo’s transformation into the Hulk. They can also be used to “age or “de-age” a face, as viewers saw in full form in Brad Pitt’s The Curious Case of Benjamin Button.

The MOVA technology was developed by Rearden, LLC, a technology incubator founded in 2000 by tech entrepreneur and former Apple employee Steve Perlman. As it happens, Perlman nearly lost control of the technology over a decade ago when a former employee surreptitiously transferred the technology to a Chinese-owned company called DD3. Perlman eventually won a 2017 legal judgment restoring the technology to him after a four-year court battle, but by then Hollywood had already been paying DD3 directly for its facial digitization technology. Disney, in particular, made considerable use of the technology by then, engaging DD3 to do work on blockbusters Avengers: Age of Ultron, Guardians of the Galaxy, and Beauty of the Beast.

Perlman, through his company Rearden, sued for direct and indirect copyright infringement in 2017—kicking off another round of litigation that continues to this day. In early 2018, the district court dismissed the direct infringement claim. That claim accused Disney of directly infringing Rearden’s software by taking the output images and using them in movies that were, in effect, derivatives of its own work. The claim failed as a matter of law, the court found, because Rearden could claim ownership only of the underlying technology and not the resulting facial digitization that emerged. Those digitizations, the court reasoned, was the creation of the actors and crew members using the technology, not the technology itself.

Rearden, undeterred, continued to press forward with its indirect copyright infringement allegations—claims based on the fact that Disney hired DD3 and supervised DD3’s infringing work. The court at first found that Rearden—on a then-amended complaint—had sufficiently stated claims for both contributory and vicarious liability against Disney. But in 2023, after discovery, the court granted summary judgment for Disney on the contributory infringement claim, finding that the evidence showed that at best that Disney had a “generalized knowledge” of Rearden’s ownership claim to the MOVA technology—not the kind of knowledge sufficient to make out a contributory infringement claim.

The case then went to the jury—but the legal wrangling continued throughout. After a two-week trial, the jury returned a verdict that Disney was vicariously liable for DD3’s infringement of the MOVA copyright during the production of Beauty and the Beast. The jury awarded Rearden $250,638 in actual damages and returned an advisory verdict that Disney’s profits attributable to infringement amounted to $345,098. The district court adopted the advisory verdict and entered judgment in favor of Rearden. However, in August 2024, the district court granted Disney’s motion for JMOL, concluding that Rearden failed to introduce legally sufficient evidence at trial that Disney had the practical ability to identify, and thereby prevent, DD3’s infringing conduct.

Rearden appealed, leading to this opinion.

Vicarious liability. The court reversed the JMOL and restored the jury verdict. Before turning to the facts of the case, the court discussed a legal threshold question: does vicarious liability always requires proof that the defendant has the practical ability to “identify” or “recognize” specific conduct as infringing? The district court, relying on a lengthy series of Ninth Circuit precedents, found that proof of such capability was always required. The court of appeals expressed some doubt that the precedents should be interpreted so strictly. “A narrow focus on the defendant’s ability to identify specific acts of infringement is in some tension with the historical roots of vicarious liability,” the court noted, “as respondeat superior liability is premised on the relationship between the defendant and the tortfeasor, rather than the relationship between the defendant and the tort.”

Nonetheless, the court of appeals found, it was not necessary to resolve the point of law because Rearden prevailed even under the strict reading of the precedents. To begin with, the court found, the evidence clearly showed that Disney had a practical ability to supervise DD3. Indeed, the evidence showed, two Disney representatives—a director and a visual effects supervisor—were physically present and actively participated in all MOVA capture sessions. Moreover, the court noted, Disney’s contract with DD3 “clearly gave it all necessary legal rights to supervise and control DD3’s use of MOVA.” And while it might have been difficult as a practical matter to interrogate every single vendor on the production about whether they were infringing anyone else’s rights, the court noted, DD3 was no ordinary vendor. “Disney paid DD3 $31 million for its services,” the court noted, “almost half of the film’s visual effects budget.”

Moreover, the court noted, the jury need not have relied only on Disney’s general practical ability to supervise and police its vendors. At trial, Rearden introduced evidence that the dispute between Rearden and DD3 over the ownership of the MOVA technology had broken out into the open just a month before Disney entered into its BATB contract with DD3. “A reasonable jury could have inferred that Disney knew or should have known of the ongoing intellectual property dispute concerning the MOVA technology,” the court observed. What’s more, the court noted, the evidence showed that a click-through Rearden copyright notice appeared on computer screens that were used to process data during the MOVA capture sessions. While the Disney employees present during those sessions testified that they did not actually see that copyright notice, the court noted, “the jury could have found this testimony not credible.”

Nor did it matter, the court observed, that the copyright dispute between Rearden and DD3 was still ongoing at the time Disney engaged DD3. Disney argued that even if it had further investigated DD3’s right to use MOVA, it could not have recognized the use as infringement because the underlying MOVA ownership dispute was not resolved until after the final use of MOVA on the movie. But “our case law has never suggested that, to be held vicariously liable for copyright infringement, a defendant must have an opportunity to know, with certainty, that the conduct in question infringes copyright,” the court noted.” Here, the court noted, there was sufficient evidence from which the jury could have reasonably concluded that Disney had the practical ability to identify that DD3’s use of MOVA was “potentially infringing.” Moreover, the court emphasized, copyright was a strict liability tort. “To limit vicarious liability to situations where infringement can be identified with certainty,” the court noted, “would effectively preclude vicarious liability in any situation where copyright ownership is actively disputed or where the direct infringer has a nontrivial fair use defense.” Disney could not rely on this ambiguity to escape liability here.

Right to jury trial on profits. The court of appeals also addressed another question that came up during the trial below: whether Rearden was entitled have a jury decide its entitlement to profits. At trial, the district court first ruled that profits were a jury question but then, reversing itself, ruled that the jury’s decision on profits would be “advisory” only and that the court would make the final decision. Did the district court have it right? The court of appeals found that it did.

The trial court had it right, the court of appeals found, because a right to a jury trial on profits could not be read into the Copyright Act. As disgorgement of profits is traditionally an equitable remedy, all parties agreed that the Seventh Circuit right to a jury trial—which covers only traditional suits at law, not in equity—did not apply here. As to whether the Copyright Act itself provided such a right, the court noted, while it was a question of “first impression” among the circuit courts, the better answer was that it did not. In the closest analogous case, Feltner v. Columbia Pictures Television, Inc., 523 U.S. 340 (1998), the Supreme Court found that there was no right to jury trial over the question of Copyright Act statutory damages. While there were some differences in wording between the provisions of the Act providing profit and statutory damages, the court noted, it did not change the general principle. Congress enacted the Copyright Act’s damages provisions, the court noted, “against a historical backdrop that generally understood disgorgement of profits as a form of equitable relief.” There was little reason to believe, therefore, “that Congress would have intended, by implication, to create a jury trial right when it added this relief to the statute.” The trial court rightly reserved the question for itself.

The Case is No. 24-3970.

Judge: Koh, L.

Attorneys: Mark Carlson (Hagens Berman Sobol Shapiro LLP) for Rearden, LLC and Rearden Mova, LLC. Kelly M. Klaus (Munger Tolles & Olson LLP) for Walt Disney Pictures.

Companies: Rearden, LLC; Rearden Mova, LLC

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