Midjourney says it never took investor money. Now Hollywood is suing it

On June 18, 2025, a week after Disney and Universal sued it for copyright infringement, Midjourney released V1, its first video model, to subscribers paying as little as $10 a month. The model turns a still image into a set of four five-second clips, according to TechCrunch's report on the launch.

Warner Bros. Discovery sued on September 4, 2025. Its complaint says Midjourney had eliminated guardrails that until then blocked users from making videos that infringe the studio’s characters, among them Superman, Batman and Bugs Bunny, according to Variety’s account of the filing. It also describes a new Midjourney TV streaming channel as a way to “substitute and compete” with the studio’s works, Deadline reported the same day.

David Holz, Midjourney’s founder, has said since 2022 that the company has no investors and runs on what its subscribers pay. When he explains that choice, he describes pricing: users pay what the service costs to run, plus a margin. The suits brought by Disney, Universal and Warner Bros. concern what those paying users can make: what the service produces when one of them asks for Darth Vader or Superman, and protections the studios say Midjourney could offer and does not. The consolidated case was back before a magistrate judge in Los Angeles on November 9, 2026, and no court has ruled on Midjourney’s fair-use defense.

Holz says subscribers paid for all that Midjourney built

Holz came to image generation from hardware. He took leave from an applied-mathematics PhD in 2008 to co-found Leap Motion, which built a device that tracks hand movements for computer input, and ran it for 12 years, leaving when it had about 100 employees, he told The Register in an August 2022 interview. He founded Midjourney in 2021.

The company reached the public as a bot inside Discord, the chat service. Discord’s case study of Midjourney, published to promote its developer platform, says the team ran user tests, found that AI enthusiasts preferred Discord to other platforms, and made its server publicly joinable in July 2022. Users typed a prompt to the bot and watched their images appear in public channels.

A month later Holz described a small company. “We’re like about 10 people,” he told The Register. “We’re self-funded. We have no investors.” Subscriptions cost $10 or $30 a month, hundreds of thousands of people were using the service, and it ran on something like 10,000 servers, he said.

His business model, as he put it then, was cost plus a margin. Users “have to pay the cost of using it because the raw cost is actually quite expensive. And then we add a percentage on top of that,” Holz said, adding that the company was already profitable.

In May 2026 he made the same case to finalists at the Regeneron International Science and Engineering Fair, where he had competed as a student in 2006. Society for Science’s account of the talk, published in September 2026, says Midjourney became profitable without outside investors and quotes him: “Raising money is very different than having a product that people are willing to pay for.” Holz sits on the society’s board of trustees. Both claims, no investors and a profit, are his own account.

The product widened while that account held. V1 animates an uploaded or generated image, and Midjourney charges eight times as much for a video generation as for an image, so subscribers on the $10 Basic, $60 Pro and $120 Mega plans use up their monthly allotment faster. In a blog post, Holz called video a step toward models “capable of real-time open-world simulations,” with 3D and real-time models planned after it.

On August 22, 2025, Alexandr Wang, Meta’s chief AI officer, announced in a post on X a partnership with Midjourney “to license their aesthetic technology for our future models and products.” The post gives no financial terms.

Hardware followed. “We’re working on a bunch of hardware projects,” Holz told the fair’s finalists, describing experiments with sensors, lasers and large-scale machines. That summer Midjourney showed an experimental full-body ultrasound scanner and plans for a San Francisco research spa built around it, Society for Science wrote. The Decoder reported in June 2026 that the scanner was built with Butterfly Network, an ultrasound company, and that Holz said about a dozen people had been scanned.

When Holz explains self-funding, he talks about pricing: customers cover the cost of compute plus a margin, and their willingness to pay tests whether a product adds value. The reasons he gives for the turns themselves concern the product, such as the simulations he names as the goal of video. That pattern suggests the funding choice shows most clearly in what Midjourney charges its users.

The studios sue over Superman, Shrek and Darth Vader

Disney and Universal filed first, on June 11, 2025, in the US District Court for the Central District of California, and demanded a jury trial. The complaint includes Midjourney images of characters from Star Wars, The Simpsons, Toy Story, Shrek and Despicable Me, according to CNBC’s report on the filing. “Midjourney is the quintessential copyright free-rider and a bottomless pit of plagiarism,” the studios wrote.

The suit says both studios wrote to Midjourney’s counsel asking it to stop, and that the company kept releasing new versions of its image generator. Midjourney told Disney it was reviewing the letter but never responded, according to the suit, and Universal said it got no reply. Horacio Gutierrez, Disney’s chief legal and compliance officer, said in a statement: “But piracy is piracy, and the fact that it’s done by an AI company does not make it any less infringing.”

Warner Bros. Discovery’s suit, filed by the same lawyers, follows the same template, Variety reported, and seeks statutory damages and an injunction. Its complaint says the studio’s characters appear even when a user types a generic prompt such as “classic comic book superhero battle.” Both studio suits say Midjourney could keep operating with protections against copying in place.

Midjourney answered the Disney and Universal suit in August 2025. Its lawyers argued that training models on copyrighted material is fair use, a doctrine allowing some unlicensed use of protected work, and placed the outputs with users. “The Midjourney platform is an instrument for user expression. It assists with the creation of images only at the direction of its users, guided by their instructions,” they wrote, as quoted by Deadline.

The company also argued that the studios should have used the notice-and-takedown procedure of the Digital Millennium Copyright Act, which shields platforms that promptly remove infringing user content. Its terms of service forbid users from violating others’ intellectual property, it said, and it accused the studios of attacking “industry standard” AI practices while seeking to profit from AI themselves.

The line between training and outputs was drawn early. In August 2022, Tyler Ochoa, a law professor at Santa Clara University, told The Register that for training “the case for fair use in that context is fairly strong,” while images that closely resemble the training data raise a separate risk of liability. Warner Bros. Discovery’s lawyers argue that Midjourney’s infringement goes well beyond training, given the outputs, Deadline reported.

The complaints call the missing guardrails a profit decision

The strongest case that Midjourney’s business model is part of the fight comes from the complaints. Warner Bros. Discovery says Midjourney “has made a calculated and profit-driven decision to offer zero protection for copyright owners even though Midjourney knows about the breathtaking scope of its piracy and copyright infringement.”

Disney and Universal put a number on the motive. Midjourney, “which has attracted millions of subscribers and made $300 million last year alone, is focused on its own bottom line and ignored Plaintiffs’ demands,” their suit says. The $300 million is the studios’ allegation.

Holz described the company’s cushion in 2022, three years before the suits. “We can lose some amount of money,” he told The Register. “We don’t have like $100 million of somebody else’s money to lose.” In the consolidated studio case, Midjourney, Inc. is the only defendant, according to the court docket.

Midjourney has tried to turn the studios’ practices into a defense. It sought discovery into their internal use of AI, arguing it would show industry custom supporting its fair-use and unclean-hands defenses, the latter a doctrine that bars relief to plaintiffs who acted wrongly themselves. Magistrate Judge A. Joel Richlin mostly denied that request on June 15, 2026, finding it irrelevant to fair use and shielding the studios’ test prompts as work product, according to the litigation tracker TopDisputes.

Read together, the complaints tie the missing guardrails to subscriber revenue, a motive that would apply with or without outside shareholders. That suggests self-funding plays a narrower role in this fight. It shapes the company at the defendants’ table, which by Holz’s 2022 account has no investor’s money to lose, while the claims turn on what users can make.

No court has ruled on fair use in either case

In the older case Midjourney has company. Visual artists including Sarah Andersen sued Stability AI, Midjourney, DeviantArt and Runway AI in the Northern District of California in 2023. In an order on August 12, 2024, Judge William H. Orrick dismissed the artists’ claims under the Digital Millennium Copyright Act and denied Midjourney’s motion to dismiss a false-endorsement claim under the Lanham Act, the federal trademark law. The hearing on summary-judgment motions was moved from November 4, 2026 to February 17, 2027 at Andersen’s request, the blog Chat GPT Is Eating the World reported.

The studio case absorbed the Warner Bros. suit in November 2025, with Disney’s case in the lead. The court referred the parties to private mediation, and they chose retired Magistrate Judge Suzanne H. Segal as mediator. The case remains active and in discovery.

Midjourney asked Judge John A. Kronstadt on June 29, 2026 to overturn the limits on its discovery. He heard the request on August 17, 2026 and took it under submission. On July 22, 2026, Midjourney moved for partial judgment on the pleadings on the studios’ contributory-infringement claims, which allege it helped users infringe, citing the Supreme Court’s Cox v. Sony decision limiting such secondary liability. The motion was fully briefed by August 25, 2026.

Discovery has reached the models themselves. Under a stipulation the court approved on October 5, 2026, Midjourney will produce the video datasets used to train its models, TopDisputes reported. Judge Richlin held another discovery hearing on November 9, 2026 and issued an order on a discovery matter, and sealed filings followed on November 12, according to the docket.

On September 23, 2026, Judge Kronstadt on his own motion moved the hearing on the Cox motion from October 26 to November 23, 2026. The motion reaches only the claims that Midjourney helped its users infringe. The studios’ claim that Midjourney itself copies their characters is not part of it.