Who Owns SpongeBob? AI Shakes Hollywood’s Creative Foundation

Mr. Wiser instructed an AI tool called DALL-E to show SpongeBob, one of Paramount’s iconic characters, flying a plane. An image of the rectangular cartoon star doing just that appeared on a large TV screen, during the presentation to Chief Executive

Bob Bakish

and others earlier this year. Next, Mr. Wiser asked the tool to show “Transformers” character Optimus Prime on the Paramount studios lot. Within seconds, it spit out an image of the towering robot next to the cafe on the lot.

The colorful demonstration raised some of the unanswered questions about generative AI technology and its potential risks. In many cases, how intellectual property rules apply to these tools is unclear or in litigation: If a user prompts an AI tool to build a new character influenced by say, SpongeBob, should the original creators have to grant permission? Who owns it? Can the new work itself be copyrighted?

“This woke everyone up,” Mr. Wiser said in an interview. 

The entertainment business is built on intellectual property ownership. Hollywood’s creative industries depend on proprietary ideas, words and images that generate revenue in finely tuned arrangements regarding permission and royalties for their use.

Fast-evolving generative AI tools have thrown a wrench into the system by harnessing and transforming a digital universe that often includes copyrighted work.

Some studios, producers and writers are already experimenting with AI tools including ChatGPT—the text-generating, humanlike chatbot—and image generators such as DALL-E and Midjourney. Widely available AI tools can recommend plotlines and character arcs, take a crack at penning dialogue and even generate short films.

Write Your Own TV Script Using AI

“One of the biggest risks here is that these engines can generate our intellectual property in new ways, and that is out in the hands of the public,” said Mr. Wiser. He has assembled a team of engineers, data scientists and machine-learning experts to explore how Paramount can customize existing AI tools in ways that will allow the company to maintain ownership of anything it creates using them.

“DALL-E produces unique, original images that have never existed before,” said OpenAI, which makes ChatGPT and DALL-E, in a statement. “Hundreds of millions of images in DALL-E’s training data were licensed by OpenAI, and others came from publicly available sources.” Midjourney didn’t respond to requests for comment.

The courts are in the early stages of testing how copyright law applies to AI models and the work they generate. In February, Getty Images sued Stability AI, a company that creates images based on text queries. The suit alleges that Stability AI used more than 12 million photographs from Getty’s catalog, without permission, to build its image-generating software. Stability AI said it doesn’t comment on pending litigation.

The U.S. Copyright Office said in March it had started studying issues raised by generative AI generative technologies including the use of copyrighted materials to train AI models. In February, the office amended a copyright it had previously granted for a comic book after officials learned that images in the work were made with the help of Midjourney, the text-to-image AI tool, and weren’t “the product of human authorship.”

Despite the copyright uncertainties, many in Hollywood expect AI technologies will expand the industry’s special-effects arsenal, trim costs and even have a role in the creative process. Venture capital investors poured $4.6 billion into generative AI companies globally last year, up from $1.9 billion in 2019, according to PitchBook Data Inc.

Mr. Wiser said he has been meeting with Paramount studio executives around the world to talk about the potential advantages and risks of using AI tools. “I’m turning into the chief evangelist of generative AI across the company,” he said.

More for less

AI tools offer the promise of slashing costs and speeding up production, according to media executives. Wall Street is putting more pressure on Hollywood giants to wring profits out of their streaming-video businesses, which few have yet been able to do. Paramount’s streaming unit, for instance, lost $575 million in the most recent quarter.

Evan Halleck,

the visual-effects specialist who worked on the Academy Award-winning movie, “Everything Everywhere All at Once,” used a generative AI tool from the company Runway for the scenes depicting two characters as rocks in conversation. 

The scene required Mr. Halleck to edit out the pulley system used to move the rocks, a process that usually requires making changes to each frame—at 24 frames per second. The AI tool automated the task, he said, saving a couple of days of work.

When filmmaker and YouTube star 

Joe Penna

worked with actress

Anna Kendrick

on her coming directorial film debut, “The Dating Game,” he used generative AI tools to create more than 5,000 photos for the 1970s-era film. He trained a custom AI model with licensed photographs to make the images, a job that otherwise wouldn’t have been economically feasible.

“The conversations we are having aren’t about how generative AI is going to create the story for you, but it is how it can make things faster and cheaper around the edges,” said

Andre James,

the global head of media and entertainment practice at Bain & Co., which has partnered with OpenAI. “And those edges are hundreds of millions of dollars.” Many companies are already using AI tools for dubbing and subtitles, he said, which represent a $2.6 billion market.

Production executives in Hollywood are wary of alienating talent or production staff, mindful of fears that AI could replace work done by humans, including some editing and visual-effects jobs.

In February,

Netflix

faced a backlash on social media after tweeting about a short anime film, made by a program in Japan that experiments with new technology, featuring imagery created by AI tools. The machine’s work took away opportunities from human artists, critics said.

Taiki Sakurai,

Netflix’s director of anime, said the company was committed to supporting human talent.

“You’re doing it cheaper, faster, better” with generative AI, said

Michael Blank,

head of consumer investing at talent agency Creative Artists Agency. CAA’s venture unit has invested in companies such as Deep Voodoo, formed by “South Park” creators Trey Parker and

Matt Stone,

which specializes in creating so-called deepfake videos.

A Tom Hanks and

Robin Wright

film that is in production, titled called “Here,” uses tools from AI company Metaphysic to make the actors look younger. The technology changes the actors’ appearances in real-time, allowing filmmakers to see how they appear during shooting.

AI can also mimic or change a celebrity’s voice.

James Earl Jones,

the voice of Darth Vader in “Star Wars” movies, allowed

Walt Disney Co.

’s Lucasfilm Ltd. to create an AI version of his voice from archived recordings with the help of Kyiv-based Respeecher Inc. The voice was used in the Disney+ TV series “Obi-Wan Kenobi.” 

Tom Graham, Metaphysic co-founder and chief executive, said the software models typically use an actor’s past films or video interviews to generate new, true-to-life content. 

Metaphysic operates a TikTok channel that features parody videos using its technology to create a young

Tom Cruise

look-alike to promote its services. Mr. Graham said the company reached out to the actor and his representatives but hasn’t been told to stop making the videos. A spokeswoman for Mr. Cruise declined to comment.

Hollywood union SAG-AFTRA, which represents performers, is open to the use of AI technology to modify an actor’s performance or likeness as long as the person agrees and is paid, said the organization’s chief negotiator,

Duncan Crabtree

-Ireland.

Companies that want to change the appearance of actors should detail the process in talent contracts, said

Matthew F. Ferraro,

counsel at WilmerHale, who advises companies on the use of AI and other emerging technologies. “ ‘Tread carefully’ is the headline,” he said, urging companies to use caution.

Identity issues

Chad Nelson,

chief creative director at Topgolf Media, which makes games and entertainment for golf lovers, wrangled an invitation last spring to beta test the DALL-E tool. “It felt like I had met the Wizard of Oz,” he said.

Mr. Nelson asked the tool to create a red furry monster that stares in wonder at a burning candle. “It literally looked like a CalArts graduate-level animation that it gave me in just 10 seconds,” he said. 

More recently, he created a short film using DALL-E and with funding from OpenAI. The movie, “Critterz,” is a comical take on the TV series “Planet Earth.” Mr. Nelson plans to release it on YouTube and Instagram this week.

For the film, Mr. Nelson asked DALL-E for a gruff little character that lives in a mossy field and is a conspiracy theorist. He also asked for a red spider, named Blue, who is in therapy and has identity issues.

Mr. Nelson said he spent hours tweaking the generated images to make sure they weren’t similar to any known characters. “If it looks like Mickey Mouse or Sonic the Hedgehog, I would never want it,” he said.

People who want to copy the work of others can already use Photoshop to alter digital images, Mr. Nelson said. He acknowledged that AI tools make it easier. “We are still in the Wild West phase of development,” he said.

There are artists, researchers and entertainment companies working to subtly alter their work to protect it from use in AI models or add new metadata to make it easier to detect unpermitted uses, according to intellectual-property attorneys. A group of artists and engineers called Spawning launched a website last year that lets artists search images used in popular AI models and opt out of having their work included.

Stability AI is one of the companies that has agreed to honor such opt out requests and said the company was “committed to implementing the considerable number of opt-out requests received.”

Some executives and creators in Hollywood say that AI technologies threaten originality in movies and TV. “AI uses what already exists out there and that doesn’t create innovation,” said

Jason Blum,

founder and CEO of horror-specialist studio Blumhouse, whose movies include “Get Out” and “M3GAN.” Blumhouse has used AI tools for special effects.

“If you look back at the most celebrated movies and shows over time, like ‘Citizen Kane,’ I find it hard to believe that any of those would exist in an AI-driven content world,” he said.

Roy Meirom,

an investor and startup adviser focused on gaming and entertainment, said that rather than stifle creativity, AI raises the bar. “You’re going to have to be more creative,” he said, “more human and more creative than machines.”

Write to Jessica Toonkel at [email protected] and Sarah Krouse at [email protected]

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

Mr. Wiser instructed an AI tool called DALL-E to show SpongeBob, one of Paramount’s iconic characters, flying a plane. An image of the rectangular cartoon star doing just that appeared on a large TV screen, during the presentation to Chief Executive

Bob Bakish

and others earlier this year. Next, Mr. Wiser asked the tool to show “Transformers” character Optimus Prime on the Paramount studios lot. Within seconds, it spit out an image of the towering robot next to the cafe on the lot.

The colorful demonstration raised some of the unanswered questions about generative AI technology and its potential risks. In many cases, how intellectual property rules apply to these tools is unclear or in litigation: If a user prompts an AI tool to build a new character influenced by say, SpongeBob, should the original creators have to grant permission? Who owns it? Can the new work itself be copyrighted?

“This woke everyone up,” Mr. Wiser said in an interview. 

The entertainment business is built on intellectual property ownership. Hollywood’s creative industries depend on proprietary ideas, words and images that generate revenue in finely tuned arrangements regarding permission and royalties for their use.

Fast-evolving generative AI tools have thrown a wrench into the system by harnessing and transforming a digital universe that often includes copyrighted work.

Some studios, producers and writers are already experimenting with AI tools including ChatGPT—the text-generating, humanlike chatbot—and image generators such as DALL-E and Midjourney. Widely available AI tools can recommend plotlines and character arcs, take a crack at penning dialogue and even generate short films.

Write Your Own TV Script Using AI

“One of the biggest risks here is that these engines can generate our intellectual property in new ways, and that is out in the hands of the public,” said Mr. Wiser. He has assembled a team of engineers, data scientists and machine-learning experts to explore how Paramount can customize existing AI tools in ways that will allow the company to maintain ownership of anything it creates using them.

“DALL-E produces unique, original images that have never existed before,” said OpenAI, which makes ChatGPT and DALL-E, in a statement. “Hundreds of millions of images in DALL-E’s training data were licensed by OpenAI, and others came from publicly available sources.” Midjourney didn’t respond to requests for comment.

The courts are in the early stages of testing how copyright law applies to AI models and the work they generate. In February, Getty Images sued Stability AI, a company that creates images based on text queries. The suit alleges that Stability AI used more than 12 million photographs from Getty’s catalog, without permission, to build its image-generating software. Stability AI said it doesn’t comment on pending litigation.

The U.S. Copyright Office said in March it had started studying issues raised by generative AI generative technologies including the use of copyrighted materials to train AI models. In February, the office amended a copyright it had previously granted for a comic book after officials learned that images in the work were made with the help of Midjourney, the text-to-image AI tool, and weren’t “the product of human authorship.”

Despite the copyright uncertainties, many in Hollywood expect AI technologies will expand the industry’s special-effects arsenal, trim costs and even have a role in the creative process. Venture capital investors poured $4.6 billion into generative AI companies globally last year, up from $1.9 billion in 2019, according to PitchBook Data Inc.

Mr. Wiser said he has been meeting with Paramount studio executives around the world to talk about the potential advantages and risks of using AI tools. “I’m turning into the chief evangelist of generative AI across the company,” he said.

More for less

AI tools offer the promise of slashing costs and speeding up production, according to media executives. Wall Street is putting more pressure on Hollywood giants to wring profits out of their streaming-video businesses, which few have yet been able to do. Paramount’s streaming unit, for instance, lost $575 million in the most recent quarter.

Evan Halleck,

the visual-effects specialist who worked on the Academy Award-winning movie, “Everything Everywhere All at Once,” used a generative AI tool from the company Runway for the scenes depicting two characters as rocks in conversation. 

The scene required Mr. Halleck to edit out the pulley system used to move the rocks, a process that usually requires making changes to each frame—at 24 frames per second. The AI tool automated the task, he said, saving a couple of days of work.

When filmmaker and YouTube star 

Joe Penna

worked with actress

Anna Kendrick

on her coming directorial film debut, “The Dating Game,” he used generative AI tools to create more than 5,000 photos for the 1970s-era film. He trained a custom AI model with licensed photographs to make the images, a job that otherwise wouldn’t have been economically feasible.

“The conversations we are having aren’t about how generative AI is going to create the story for you, but it is how it can make things faster and cheaper around the edges,” said

Andre James,

the global head of media and entertainment practice at Bain & Co., which has partnered with OpenAI. “And those edges are hundreds of millions of dollars.” Many companies are already using AI tools for dubbing and subtitles, he said, which represent a $2.6 billion market.

Production executives in Hollywood are wary of alienating talent or production staff, mindful of fears that AI could replace work done by humans, including some editing and visual-effects jobs.

In February,

Netflix

faced a backlash on social media after tweeting about a short anime film, made by a program in Japan that experiments with new technology, featuring imagery created by AI tools. The machine’s work took away opportunities from human artists, critics said.

Taiki Sakurai,

Netflix’s director of anime, said the company was committed to supporting human talent.

“You’re doing it cheaper, faster, better” with generative AI, said

Michael Blank,

head of consumer investing at talent agency Creative Artists Agency. CAA’s venture unit has invested in companies such as Deep Voodoo, formed by “South Park” creators Trey Parker and

Matt Stone,

which specializes in creating so-called deepfake videos.

A Tom Hanks and

Robin Wright

film that is in production, titled called “Here,” uses tools from AI company Metaphysic to make the actors look younger. The technology changes the actors’ appearances in real-time, allowing filmmakers to see how they appear during shooting.

AI can also mimic or change a celebrity’s voice.

James Earl Jones,

the voice of Darth Vader in “Star Wars” movies, allowed

Walt Disney Co.

’s Lucasfilm Ltd. to create an AI version of his voice from archived recordings with the help of Kyiv-based Respeecher Inc. The voice was used in the Disney+ TV series “Obi-Wan Kenobi.” 

Tom Graham, Metaphysic co-founder and chief executive, said the software models typically use an actor’s past films or video interviews to generate new, true-to-life content. 

Metaphysic operates a TikTok channel that features parody videos using its technology to create a young

Tom Cruise

look-alike to promote its services. Mr. Graham said the company reached out to the actor and his representatives but hasn’t been told to stop making the videos. A spokeswoman for Mr. Cruise declined to comment.

Hollywood union SAG-AFTRA, which represents performers, is open to the use of AI technology to modify an actor’s performance or likeness as long as the person agrees and is paid, said the organization’s chief negotiator,

Duncan Crabtree

-Ireland.

Companies that want to change the appearance of actors should detail the process in talent contracts, said

Matthew F. Ferraro,

counsel at WilmerHale, who advises companies on the use of AI and other emerging technologies. “ ‘Tread carefully’ is the headline,” he said, urging companies to use caution.

Identity issues

Chad Nelson,

chief creative director at Topgolf Media, which makes games and entertainment for golf lovers, wrangled an invitation last spring to beta test the DALL-E tool. “It felt like I had met the Wizard of Oz,” he said.

Mr. Nelson asked the tool to create a red furry monster that stares in wonder at a burning candle. “It literally looked like a CalArts graduate-level animation that it gave me in just 10 seconds,” he said. 

More recently, he created a short film using DALL-E and with funding from OpenAI. The movie, “Critterz,” is a comical take on the TV series “Planet Earth.” Mr. Nelson plans to release it on YouTube and Instagram this week.

For the film, Mr. Nelson asked DALL-E for a gruff little character that lives in a mossy field and is a conspiracy theorist. He also asked for a red spider, named Blue, who is in therapy and has identity issues.

Mr. Nelson said he spent hours tweaking the generated images to make sure they weren’t similar to any known characters. “If it looks like Mickey Mouse or Sonic the Hedgehog, I would never want it,” he said.

People who want to copy the work of others can already use Photoshop to alter digital images, Mr. Nelson said. He acknowledged that AI tools make it easier. “We are still in the Wild West phase of development,” he said.

There are artists, researchers and entertainment companies working to subtly alter their work to protect it from use in AI models or add new metadata to make it easier to detect unpermitted uses, according to intellectual-property attorneys. A group of artists and engineers called Spawning launched a website last year that lets artists search images used in popular AI models and opt out of having their work included.

Stability AI is one of the companies that has agreed to honor such opt out requests and said the company was “committed to implementing the considerable number of opt-out requests received.”

Some executives and creators in Hollywood say that AI technologies threaten originality in movies and TV. “AI uses what already exists out there and that doesn’t create innovation,” said

Jason Blum,

founder and CEO of horror-specialist studio Blumhouse, whose movies include “Get Out” and “M3GAN.” Blumhouse has used AI tools for special effects.

“If you look back at the most celebrated movies and shows over time, like ‘Citizen Kane,’ I find it hard to believe that any of those would exist in an AI-driven content world,” he said.

Roy Meirom,

an investor and startup adviser focused on gaming and entertainment, said that rather than stifle creativity, AI raises the bar. “You’re going to have to be more creative,” he said, “more human and more creative than machines.”

Write to Jessica Toonkel at [email protected] and Sarah Krouse at [email protected]

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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