Disney and Universal joined forces in a lawsuit against artificial intelligence image creator Midjourney, alleging copyright infringement.

It is the first AI copyright lawsuit from Hollywood giants.

The lawsuit claims that the company used and distributed AI-generated characters from the movie studios like Star Wars, The Simpsons and other films and alleges that Midjourney disregarded requests to stop.

The studios included numerous examples in the suit of AI-generated images of characters from Cars, Toy Story, Shrek, The Avengers and the minions from Despicable Me.

Disney and Universal are demanding a jury trial, arguing that the actions threaten to “upend the bedrock incentives of U.S. copyright law.”

“Midjourney is the quintessential copyright free-rider and a bottomless pit of plagiarism,” the movie studios said, calling the actions “calculated and willful.”

Both companies said they sent letters to Midjourney’s counsel to prevent further copyright infringement, but the company continued to release new iterations of its image generator.

“​​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,” the suit says.

CNBC has reached out to Midjourney for comment on the case.

The rise of AI has raised the stakes in the media industry, and sparked concerns over how to protect content from illegal copyrighting. This is one of the most significant copyright legal battles to date involving AI.

“Creativity is the cornerstone of our business,” said Kimberley Harris, executive vice president and general counsel of NBCUniversal, in a statement. “We are bringing this action today to protect the hard work of all the artists whose work entertains and inspires us and the significant investment we make in our content.” 

Midjourney told Disney it was reviewing the letter but never responded, according to the suit. Universal said Midjourney did not respond to its letter.

“We are bullish on the promise of AI technology and optimistic about how it can be used responsibly as a tool to further human creativity,” said Horacio Gutierrez, senior executive vice president and chief legal and compliance officer of The Walt Disney Company, 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.”

The lawsuit was filed in the United States District Court Central District of California.

WATCH: Disney, Universal file complaint against AI company Midjourney alleging copyright

Disclosure: Universal is owned by NBCUniversal, the parent company of CNBC. Comcast owns NBCUniversal.

Tesla rallied for a fourth straight session as the spat between CEO Elon Musk and President Donald Trump showed further signs of a cooldown.

Shares rose about 2% Wednesday and were up more than 12% this week.

Tesla investors also caught a spark of hope for the company’s robotaxi strategy after Musk said the service will “tentatively” launch in Austin, Texas on June 22. In a post on X, Musk said the first driverless robotaxi will travel from the factory to a customer’s house on his June 28 birthday.

Overnight, the Tesla CEO said in a post on social media platform X that he regrets some of his recent social media posts about Trump and that they “went too far.”

Last week, a public feud between the two erupted, dissolving a tight-knit partnership that included hefty donations to Trump’s re-election campaign and a leadership role for Musk in slashing budgets at the newly created Department of Government Efficiency, known as DOGE.

Musk’s attacks on the Trump-backed massive tax and spending bill initially sparked the feud.

Musk blasted the plan on X, calling it a “disgusting abomination” that would hike the current deficit.

That escalated a tit-for-tat social media battle that resulted in Trump hinting at cutting government contracts with Musk’s companies and led to Tesla’s biggest-ever market cap loss.

— CNBC’s Lora Kolodny contributed reporting

Meta on Wednesday announced it’s rolling out a new AI “world model” that can better understand the 3D environment and movements of physical objects.

The tech giant, which owns popular social media apps Facebook and Instagram, said its new open-source AI model V-JEPA 2 can understand, predict and plan in the physical world. Known as a world model, these systems take inspiration from the logic of the physical world to build an internal simulation of reality, allowing AI to learn, plan, and make decisions in a more human-like manner.

For example, in the case of Meta’s new model, V-JEPA 2 can recognize that a ball rolling off a table will fall, or that an object hidden out of view hasn’t just vanished.

Artificial intelligence has been a key focus for Meta CEO Mark Zuckerberg as the company faces competition from players like OpenAI, Microsoft and Google. Meta is set to invest $14 billion into artificial intelligence firm Scale AI and hire its CEO Alexandr Wang to bolster its AI strategy, people familiar with the matter tell CNBC.

Meta touted the benefits of its new V-JEPA 2 model in machines like delivery robots and self-driving cars. These machines need to be able to understand their surroundings in real-time to navigate the physical world.

Rather than relying on large amounts of labelled data or video footage, V-JEPA 2 reasons in a simplified “latent” space to understand how objects move, interact and respond, the tech giant said.