Why Notoriously Litigious Disney Is Letting Fan Stores Thrive

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Wander through any one of the Disney parks — or rather, peruse its Instagram geotags — and among the families of tourists and kids with ice cream-smeared faces you'll see a sizable contingent of selfie-savvy parkgoers in carefully planned outfits: Minnie Mouse ears shimmering with sequins or adorned with 3D-printed Tinkerbells and Peter Pans, T-shirts with phrases like “Princess Vibes Only” or “Greetings From Neverland,” and a smattering of enamel pins and iron-on patches with winking, Disney-inspired designs like swirls of Dole Whip, the pineapple soft-serve available exclusively in the parks, or teeny-tiny renderings of Baby Groot, the improbably adorable treelike character from Guardians of the Galaxy Vol. 2.

In most cases, you won't find the gear in any official Disney store, where your mom may have bought you a Donald Duck tee and set of ears as a kid. Instead, click the tags and you'll land on some of the hundreds of small shops run by Disney devotees who have turned their fandom into full-time businesses, making T-shirts, buttons, pins, patches, jewelry, ears, and more inspired by all things Walt. In some cases, you have to be something of a Disney buff to recognize the references — if you've never been to the Magic Kingdom, for instance, you might not know that a tee reading “Meet Me at the PeopleMover” is a nod to the elevated train attraction that runs through the park. In others, however, you'd have to be blind to miss them: there's clothing with characters from Snow White and The Little Mermaid, buttons with scenes from Frozen and Moana, and Mickey's unmistakable silhouette stamped on just about every product you can think of.

That Disney has captured the imagination of the style-conscious millennial customer isn't surprising in itself: the generation grew up in the ’90s, which brought us classics like The Lion King, Mulan, Beauty and the Beast, and Toy Story, and now craves nostalgia with such fervor they're turning Tamagotchis into earrings and rebooting TV shows from the era by the dozen.

What's more surprising is that Disney isn't stepping in to curb the proliferation of shops playing fast and loose with its intellectual property — after all, many of those characters and logos are subject to copyright and trademark protection, areas that Disney has historically ruled with an iron fist. The corporation's reputation for hard-line litigiousness was forged throughout the ’80s and ’90s, and carries on to today. Over the years, its legal team has made headlines for suing a preschool over a mural that featured Mickey Mouse, Donald Duck, and Goofy and a family-owned party business for using knockoff Winnie the Pooh costumes. Since acquiring Lucasfilm in 2012, it has begun cracking down on unauthorized use of Star Wars intellectual property, including suing a Lightsaber Academy that offered Jedi training classes. It's gone after the big guys, too, filing a copyright-infringement lawsuit against the Academy of Motion Picture Arts and Sciences for using Snow White in the infamously disastrous opening act of the 1989 Oscars. "Disney writes the book on being tough," a copyright lawyer later told Newsweek. "They'll sue anybody and anything."

All of which sounds like a rather inhospitable environment in which to start a Disney-inspired commercial enterprise, and yet by all accounts, the small-shop world is thriving. There are at least two dozen independent shops that have between 30,000 and 75,000 followers on Instagram, a scale at which almost all of the owners work on their line full time; many have even hired small teams. Lower the bar to a few thousand followers, and the number of sellers climbs well into the hundreds. There's even a subscription box, Mouse Merch Box, which comes filled with Disney-inspired goodies from different small shops each month, as well as a whole subset of drinking-themed tees (“Mickey Ears and Cold Beers,” “Drinking Beauty,” etc.). And while plenty sell on Etsy, many more operate slick standalone e-commerce sites that feature professional photography and hyped-up product drops that sell out shortly after they go live (as well as, in some cases, disclaimers that the store is in no way affiliated with The Walt Disney Company, its affiliates, or subsidiaries).

Sararose Krenger witnessed the early days of the community when she started her blog, Dressed In Disney, in 2014. The concept, which encouraged readers to tag their outfit photos with #dressedindisney for a chance to be featured, was inspired by Krenger's desire to see how fans styled their Disney merch, and gave her a front-row seat to witness what her fellow 20-something fans were wearing to the parks and beyond.

Back then, she says, there were just a handful of well-known names in the small-shop world, which soon snowballed into 10 or 15 before booming “within the past year and a half.” Her blog's community has grown during this time, too: Among the 40,000 tagged images, there are snaps of customers against Tomorrowland's Insta-friendly Purple Wall, flat lays of outfits accessorized with ears and Mickey mugs, and posts from shops announcing, say, a restock of a Jack Skellington dad hat or a new tee with “Thumper” spelled out in Thrasher font. “It's been really cool to see people take their ideas of how they interpret Disney and how they'd like to see that in fashion and on clothing and accessories and grow that all ridiculously fast,” says Krenger. “These people are talented, and they're smart. They know what they're doing, for sure.”

Certainly, some of them seem to have found their retail pixie dust. In April, less than a year after launching the brand, the founders of The Lost Bros. celebrated $100,000 in sales, and their designs, which include Mickey-waffle-and-bacon skull-and-crossbones tees and team tanks reading “Beauties,” “Beasts,” “Troopers,” “Rebels,” and “Monsters” are a hit amongst parkgoers, regularly selling out online.

This fall, Cakeworthy, a brand that got its start on Etsy, will be the first small shop to launch an officially licensed Disney collection, joining the ranks of behemoths like Zara, Marc Jacobs, Coach, and Gap. As with any of its licensing agreements, Disney has given the brand permission to use its characters and other intellectual property in exchange for royalty payments — which, as the world's biggest licensor, will eventually land in very large coffers ($56.6 billion in licensed-merchandise sales in 2016). Procuring the license wasn't easy, however, especially for a two-person operation like Cakeworthy. Applicants have to prove that they have the sales to support the line, along with ethical production standards, shipping capabilities, and adequate customer service.

“We had to really beg and plead and barter and tell them, ‘No, trust us. We're not just some random thing. We sell. Please trust us,’” says Leslie Kay, who co-owns the brand with founder Brandon Shedden. It's funny to think of Kay as a “random thing” considering how well-known she is within the Disney community: In 2011, she created DisneyBound, a Tumblr blog turned movement in which fans channel their favorite characters through everyday clothes, skirting the regulations that adults not come in costume so as not to get confused for the characters roaming around the parks. The idea took off immediately, and is now so popular that it has become a verb (as in “I'm Disneybounding as Belle this weekend”).

Still, while Kay has worked with Disney in numerous capacities, collaborating on DVD bonus features; guest blogging for its fashion and lifestyle-focused editorial site, Disney Style; and working with its marathon and running event division, runDisney, obtaining approval to produce products required a different set of credentials.

Cakeworthy did have one important selling point that a more mass brand may have lacked, however: a customer base of diehard Disney fans, whose eagerness for park-inspired merch was such that even a simple hat reading “Neverland” could sell out in minutes. “I think they definitely like the fact that we literally sell to their annual pass holders,” says Kay, referring to the passes that grant year-round admission to the theme parks at each resort (the Platinum Pass for Walt Disney World currently sells for $779 plus tax). “That's kind of our main demographic. So they know that whatever we make using their license will go in the hands of the people that love them the most.”

It also had to prove it had toed the line with Disney's IP up until that point. “It's really hard. I don't fully know how that balance works. I've heard of people getting in trouble, and I know that, in the beginning, we even got, like, a ‘Don't do that,’ message,” says Kay, pointing to the mouse-ears silhouette, Disney characters, and certain quotes as iconography she and Shedden have been advised to steer clear of. “It's really using your creative juices, every ounce that you have to come up with something that's not going to [upset] a company that you want to work with. And that's something that I think every brand — we're all learning that balance and learning from each other, too, to see what creative things the other comes up with, like, ‘Okay, that was safe to do, so we can do a safe thing, too.’”

For Brittany and Leo De La O, playing it safe with their shop, Main Street Press, has only encouraged them to get more inventive with their designs, the most popular of which have been tributes to the Animal Kingdom theme park at Disney World: a crest reading “Everest Explorers” and a trio of giraffes above the words “Jambo Means Hello.”

The couple launched the company in February 2016 and turned it into their full-time jobs after four or five months, investing their time and money into making the product, marketing, and customer service as professional as possible. Ultimately, their goal is to follow in Cakeworthy's footsteps, get officially licensed, and grow the shop into a brand. “We're definitely trying to cross our T’s and dot our I’s to make sure that everything we're doing, for the day that we do meet with Disney to get licensed, that they can look back at our track record and see that we have not overstepped any of their intellectual property,” says Brittany. Unlike most small shops, they also own their own screen-printing press, which gives them some autonomy in what they produce.

One customer, for instance, emailed with a special request: Her husband wore a size 8X and could never find shirts in the park that fit, and could they make one especially for him? This kind of personal attention is one area in which small shops can deliver in ways a huge corporation never could, which surely Disney recognizes. Design ideas that might never get enough traction to be sold on a mass scale may find their niche online, and customers that otherwise weren't being served by the official channels may be the precise demographic for a particular Etsy store.

It's also clear that the company is taking some cues from what shoppers are buying (and photographing) from independent sellers. Earlier this month, Disney rolled out an official product undeniably aimed at the Instagram set — rose-gold sequined Minnie ears with a matching metallic bow — and sure enough, one by one, fans took the bait: “Disney Parks are finally giving the people what they want — Rose gold ears!! My inner basic white girl has zero chill,” gushed Disney blogger @styledbymagic, holding the gleaming ears up in front of Cinderella's Castle (a photo that is to Walt Disney World what That DUMBO Instagram is to Brooklyn).

The ears sold out almost immediately in the parks, but online, some commenters were less enthused, pointing out that they looked remarkably similar to ones already being sold by several small shops, most notably Bibbidi Bobbidi Brooke, one of the top Instagrammers in the Disney community with more than 200,000 followers across her two accounts. Brooke began selling rose-gold ears in February 2016, hers slightly puffier, sequined all over, and, according to commenters, far more comfortable than the official park version. She took the news of the lookalike ears in stride, insisting in a post that she's “always excited to see new merch offerings,” but still, her followers rallied around her in the comments, writing “I was honestly a little heartbroken for you when I saw the Disney post” and “Yours will always be the original!!!”

While relatively benign, the controversy underlines the unique relationship Disney has with the community of small shops that has flourished online in the past few years. As the company makes strides to tap into the fashion-forward millennial demographic, as it has been with its slew of Minnie Style collaborations, independent sellers provide a valuable lens into what products those customers are most excited about.

As Magically Made Ears, another small shop that makes sequined rose-gold ears, posted on Instagram: “I can't help but as a small shop a little feel like the scene with Mike Wazowski and Roz [from Monster's Inc.]… ‘I’m watching you Wazowski, always watching... always!’” referring to the scene in which the cantankerous manager stares down the protagonist over her horn-rimmed glasses. While Disney did not respond to queries for this piece, the company has made noticeable overtures to its style-conscious customers in recent months, launching The Dress Shop, a collection of retro-inspired pieces that evoke characters, stories, and park attractions in all-over prints, ears with interchangeable bows, and snack-themed tees, including a pretzel-shaped Mickey that recalls one of The Lost Bros.’ designs.

Krenger, who has worked with Disney since the early days of her blog, says the company is responsive to feedback and eager to recognize the millennial consumer. “They've got their ears, their minds, and their hearts open,” she says. “They obviously want to build the best business that they can, but they realize that consumer experiences and feedback are key in doing that.”

Many of the small-shop owners are also the same people drumming up excitement around Disney (largely for free), posting daily on Instagram about their Disney-themed outfits, Disney snacks, and visits to Disney parks, all the while providing frequent fodder for the company's official accounts to repost. So while Disney may not see the $25 a fan spends on a T-shirt from an independent seller, that same fan may be inspired to wear it to Disney World (admission price: $181.05 during regular season), stay at a Disney hotel (average nightly rate: $388), and buy food and official merch in the parks while they're there. Overall, parks and resorts make up a larger share of Disney's overall revenue than the company's consumer products segment — $17 billion compared to $5.5 billion in 2016 — and much of the fan-made merchandise is specifically geared toward the park-bound customer.

So while some shops may in fact be infringing on the company's IP, that doesn't necessarily mean that Disney is eager to invest in shutting them down — particularly after 2013’s Frozen became the highest-grossing animated movie of all time, its popularity spurred by the endless cover songs and parodies of its inescapable track “Let It Go,” whose collective view counts on YouTube now number well into the billions.

Since then, says Rebecca Tushnet, a professor of intellectual property law at Georgetown and Harvard Law School, “Disney has actually substantially changed its enforcement practices… I still don't think they're interested in letting anyone build a multimillion-dollar business, but they are much more understanding of the role that fan engagement plays.” Disney's responsibility is, after all, to its shareholders, which may explain why it may not want to have its lawyers spending their valuable time playing whack-a-mole with small shops — and why it may want to avoid the potential PR fallout for doing so.

“As a profit-seeking organization, you have to think about what's the best use of your time,” reasons Tushnet. “Most businesses fail. Most people on Etsy don't go on to become super successful. Maybe you wait around for them, and if they do, then you start talking to them. But as the record industry found out, it looks bad to sue your fans if they're doing it because they are your fans.” Indeed, taking legal action against small businesses has been bad PR for Disney in the past — its previous lawsuits earned the company comparisons to Cruella De Vil and Ebenezer Scrooge in the press. In the dispute over the Mickey and Minnie mural, the Chicago Tribune even interviewed the preschoolers at the school (“If they took them off the wall, I'd be sad,” said 5-year-old Christopher), while competitors Universal Studios and Hanna-Barbera seized the opportunity to paint over the wall with their own characters, hosting a triumphant ceremony to unveil a new mural featuring Scooby-Doo, Fred Flintstone, and the Jetsons.

Still, Disney has reason to be protective of what may be its most valuable asset. The company holds both copyrights and trademarks — the former giving it the exclusive right to control the reproduction, distribution, performance, display, and creation of its “original works of authorship,” along with the right to create any derivative works, and the latter protecting marks like logos and brand names that indicate the source of goods it produces. Dozens of Disney movies — among them Snow White, Peter Pan, and The Little Mermaid — are based on stories that were already in the public domain, giving the company the right to create its own derivative works. However, everything that it added after that — animated characters, images, songs, dialogue — would be protected by copyright.

The most famous of Disney's registered copyrights is, of course, Mickey Mouse, who made his first appearance in the 1928 sound film Steamboat Willie. This originally granted the character copyright protection until 1984. Since then, however, Congress has twice introduced new legislation — largely in response to lobbying from Disney and other powerful copyright holders — so that now the mouse won't go into the public domain until 2023. According to a Priceonomics analysis of Open Secrets data, the corporation has spent $87.6 million on lobbying since 1997, much of that to advance copyright interests. As for why it would put so much effort into politics, Forbes has estimated Mickey Mouse's worth to Disney at $5.8 billion per year, dubbing the character the world’s “richest fictional billionaire.”

Even when Mickey's copyright does expire, though, Disney can still hold onto its corresponding trademarks in perpetuity so long as they continue to use them commercially. Currently, it has 19 related to the mouse, for everything from pillow cases to perfumes and backpacks to baseball caps. A common misconception, says Tushnet, is that companies have to consistently enforce their trademarks in order to maintain them, though she says that “Disney apparently has good enough legal counsel to know that that is actually basically a myth.

“If your trademark becomes the generic word for something, then you can't enforce it,” she clarifies, “but as long as people still recognize it's yours, even if someone has been infringing for a while and you just haven't gotten around to them, you don't lose the ability to enforce against them, or against anyone else.” The key question for the courts in these cases is whether the design may cause consumer confusion — as in, if you, the purchaser, or even anyone who saw you wearing the product would think it was produced or endorsed by Disney.

Both copyright and trademark law allow for a fair use defense, which essentially gives the go-ahead to a design even if it infringes on IP. For copyright, this includes artwork used in cases like education, news reporting, criticism, and comment (such as, for instance, this video created by a professor at Bucknell University explaining copyright law using only clips from Disney movies), and also applies to works that are “transformative” and add something substantially new to the work (Richard Prince has used this defense on multiple occasions). Courts may also look at how much of the work has been used — in some cases, using even a single line has been considered unfair because it is the “heart” of the work, while in others, using a work in its entirety has been considered fair. The infringing party may also go after a parody defense if the work is used satirically or for humorous effect, as this is considered a form of commentary.

As far as trademarks, it's considered fair use to refer to a mark descriptively, especially when it also refers to a person, place, or attribute of goods and services, and courts tend to favor the use of word marks over designs or logos. “It really is all about consumer confusion, so if you are Disney's No. 1 fan, it isn't necessarily confusing to say, ‘I’m Disney's No. 1 fan and I make replica costumes,’” explains Tushnet.

All of these things would have to be argued in court, however, which, for a small company going up against a huge corporation, is often prohibitively costly. In the past, many such disputes have been addressed with a cease-and-desist letter from the IP holder — in turns considered “bullying” and a reasonable means of protecting one's copyrights or trademarks.

In other cases, when designs are sold through third-party platforms, they may simply be removed: In 2009, for instance, a designer had his T-shirt design taken down from online marketplace Zazzle for allegedly infringing on Disney's IP. Specifically, the company took umbrage with the image of Cinderella's Castle on the front of the shirt.

“The Disney castle concept is the protected intellectual property of Disney Inc. and may not be used on Zazzle products without permission, regardless of who the original artist or photographer may be,” a Zazzle rep wrote to the designer. Disney does, in fact, have a registered trademark for the “castle device” for use on certain products, though today, the castle appears on patches, pins, T-shirts, ears, hoodies, drink koozies, and more. One ubiquitous design features the shape of the castle with the word “home” at the center, the creation of The Home T, a five-year-old company known for its state-pride shirts and for donating a portion of proceeds to multiple sclerosis research. In its first year of business, the brand netted $1.1 million in sales, the founder revealed in a 2015 appearance on “Shark Tank,” and it has since expanded into accessories, home goods, and a range of tanks, tees, and hoodie.

This entrepreneurial spirit runs throughout the community of small-shop owners, with many citing Walt Disney himself as inspiration. The founder is so relatable, says Krenger, because he's the underdog of his own story: “He struggled for so long with being creative, and then finally his dreams and his visions came true.” Whether Disney the corporation will now nurture many of its biggest fans’ dreams is a tale that’s still unfolding, and one that could shape its relationship with them.

As for those shop owners who do take the risk of using Minnie, Ariel, Simba, et al? “We all have to take responsibility for our artwork,” says Brittany De La O. “May the Force be with them.”