The U.S. Supreme Court has reopened a lawsuit against Disney regarding Lots-o’-Huggin’ Bear, a.k.a. Lotso, a main character in “Toy Story 3.”

According to Reuters, Randice-Lisa Altschul first filed to sue Disney over the character in 2012. A lower court eventually ruled that Disney was protected against the lawsuit by the First Amendment’s right to freedom of speech. The Supreme Court has thrown that decision out, however, and the lawsuit will move forward once again.

The Toy Story Lotso Legal Battle

In 1994, Altschul invented the wearable Lots of Hugs bear, which has sleeves that allow it to “hug” someone. Altschul’s company (Diece-Lisa Industries) owns intellectual property rights to the stuffed animal. After “Toy Story 3” was released in 2010, Altschul sued Disney for trademark infringement due to similarities between her Lots of Hugs bear and Lots-o’-Huggin’ Bear.

U.S. District Judge Terry Hatter ruled in Disney’s favor in 2021, as did the 9th U.S. Circuit Court of Appeals in 2022. They cited the Rogers test, a legal construct named for Ginger Rogers and the case Rogers v. Grimaldi, which Rogers lost. The “test” means artists can use someone else’s trademark without permission if it has artistic relevance to the work and is not purposefully misleading as to the source of the content.

Diece-Lisa Industries argued to the Supreme Court that Disney should not have been protected under the Rogers test and the ruling in their favor “radically expanded” the Rogers test beyond its original intent to protect “culturally significant” works.

A June 8 ruling by the Supreme Court also impacted the Rogers test. Jack Daniels sued VIP Products over a “Bad Spaniels” dog toy resembling the whiskey company’s bottles. The Supreme Court decided the First Amendment did not protect VIP Products in this case. This may indicate somewhat of a favorable turnaround for Diece-Lisa.

The case is officially referred to as Diece-Lisa Industries Inc v. Disney Store USA LLC, U.S. Supreme Court, No. 22-347. Diece-Lisa Industries is represented by William Delgado of DTO Law, while Disney is represented by Robert Klieger of Hueston Hennigan.

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