The legal battle between
. Discovery and Midjourney represent pivotal moments in the evolution of AI-driven content creation and intellectual property (IP) rights. To train AI models by suing mid-journeys who allegedly used copyrighted characters (such as Superman, Batman, Scooby-Doo), Warner Bros Discovery is challenging the boundaries of fair use under US copyright law (1). This case, along with similar litigation, demonstrates a broader industry effort to assert control over AI generated content, allowing it to redefine the legal and financial environment for both media rights holders and AI developers.
Legal Meaning: Redefining fair use and AI training
Core legal issues
. Discoveryv. The Midjourney case is whether training AI models constitutes fair use with copyrighted materials. Midjourney defends the practice by citing fair use, claiming that copyright law does not grant absolute control over derivative work (3). However, Warner Bros Discovery argues that the exclusive right to profit from IP (through licensed products and content) is undermined by the AI-generated replicas of that character (5).
If the court ruled in favor of Warner Bros Discovery, AI companies could face a new legal obligation to secure a license to train data, and could significantly change their business models. This could lead to a surge in demand for IP licensing platforms and legal compliance tools, creating investment opportunities for businesses that promote rights management. Conversely, a judgment in favour of Midjourney could establish precedents that allow for the broader use of copyrighted material for AI training, potentially devaluing IP assets, but spurring AI-driven creativity innovation.
Market trends: AI regulations and rapid growth in legal technology
The legal sector is rapidly adopting AI to address the complexities of IP litigation and compliance. In 2025, AI-driven legal automation controlled US legal technology investments with platforms like Harvey, Spotdraft and Evenup secured more than $500 million in funding (2). These tools are used for tasks such as document review, legal research, and contract analysis, and AI outweighs traditional methods of identifying risky terms (6).
Investors are also taking advantage of the growing demand for AI regulations. The US federal government introduced 59 AI-related regulations in 2024, doubling the number since 2023, but states have enacted laws to address issues such as algorithm bias and deepfakes (6). This regulatory environment has increased the demand for legal technology solutions that help businesses navigate compliance, particularly in high-stakes areas such as media rights. For example, AI-powered tools that detect IP misuse in AI-generated content can be important for studios and publishers.
Investment Opportunities: Media Rights and Legal Techniques
The convergence of AI and IP methods creates three important investment opportunities:
Legal Technology for IP Compliance: Companies developing AI tools to monitor and enforce IP rights are well placed to benefit from an increase in litigation. For example, platforms that scan content generated by AI for misuse of copyrighted material can see strong demand if courts control rules against AI companies like Midjourney.
Media Rights License Platform: If AI training data requires licenses, a platform that promotes rights management, such as a blockchain-based IP registry, should become essential. This is in line with the growth trend of tokenizing media assets with a 33% increase in strategic M&As involving AI targets in H1 2025 (5).
AI Regulatory Consulting: When governments implement stricter AI regulations, consulting companies specializing in compliance with AI developers and media companies will gain traction. The sector is already growing, with 43% of legal experts prioritizing AI tools that integrate with existing legal workflows (4).
Long-term outlook: Balance between innovation and IP protection
Warner Bros Discovery V. The outcome of lawsuits like the Mid Journey will shape the future of AI content creation. If the courts have IP owners, the industry can see the shift to “AI-Safe” training datasets and the rise in collaboration between studios and AI companies. This could lead to new revenue streams for media companies through licensing agreements, but AI developers may need to invest in their own training data.
Conversely, rulings in favour of AI companies could accelerate the adoption of generated AI in the creative industry, but could also erode the value of traditional IPs. This scenario could spark a wave of regulatory pushbacks from lawmakers seeking to protect IP rights, but it supports AI startups and platforms that democratize content creation.
For investors, the key is to balance exposure on both sides of this debate. Strategic investments in legal technology and media rights management can violate regulatory risks, but supporting AI innovations ensures participation in sector growth. As the legal and market impacts of AI-driven content creation unfold, the ability to navigate this complex landscape defines the next era of investments in technology and intellectual property.
sauce:
(1) Warner Bros Discovery is based in Batman, Superman… (https://www.latimes.com/entternation-arts/business/story/2025-09-04/batman-superman-studio-warner-bros-sues-ai-company-midjourney)
(2) Legal technology investment will skyrocket in 2025 (https://www.legal.io/articles/5576780/legal-tech-investments-surge-in-2025)
(3) Warner Bros Discovery sues midjourney: a groundbreaking case of AI and copyright law (https://pixeldojo.ai/industry-news/warner-bros-discovery-sues-midjourney-a-landmark-case-in- and-copyright-law)
(4) Legal Industry Report 2025, (https://www.fedbar.org/blog/the-legal-industry-report-2025/)
(5) Artificial Intelligence H1 2025 Global Report (https://www.ropesgray.com/en/insights/alerts/2025/08/artificial-intelligence-h1-2025-global-report)
(6) U.S. technology legislation and regulatory updates – 1st quarter…, (https://www.insideglobaltech.com/2025/04/23/us-tech-Legilative-Regulatory-pirst-quarter-2025/)
