Copyright Case Threatens Disney

Walt Disney could lose copyright over Mickey Mouse in as little as two years after the US supreme court agreed to hear the arguments for overturning existing rules.

The case, which will not be heard until at least October, could prove devastating for Disney. Copyrights on other big money-making characters, including Donald Duck, Pluto and Goofy would also lapse within a few years if the law were overturned.

The case is being brought by Eric Eldred, who is trying to build an online library of free books and is more concerned with works of literature than Disney. He argues that a 20-year extension to existing copyrights granted in 1998, the Sonny Bono Copyright Term Extension Act, violates free-speech rights.

Disney is not the only company that would be adversely affected if the law is overturned. Works by Ernest Hemmingway, F Scott Fitzgerald and the music of George and Ira Gershwin would also lose their copyright shortly as would many properties owned by AOL Time Warner.

"The law created a dam that prevented a lot of works from entering the public domain," Mr Eldred said. "It is a real shame - because they want to protect Mickey Mouse it is causing a lot of other works to be unavailable." Under existing law, works owned by corporations are now protected for 95 years, while a new work owned by an individual receives protection for the life of the author plus 70 years. The Sonny Bono extension brought US copyright law into line with Europe.

A Disney spokeswoman said the extension had the support of "a broad coalition from the creative community". Characters or works that lose copyright fall into the public domain, and can be used without royalties payments.

Separately, Disney yesterday narrowly avoided losing a shareholder vote forcing it to separate the companies it uses for consulting and auditing - but said it intends to split the two regardless.

The vote was the first in what is expected to be a series brought by shareholder activist groups to push for greater accountability in the wake of the Enron scandal. Issues of corporate governance were high on the agenda at the Disney annual meeting in Hartford, Connecticut, with a motion to limit stock options awarded to executives also being defeated.

Investors owning 473m shares voted to prohibit Disney from using its outside accountants for other services while 648m voted against - and it was the large number voting in support that provided further proof of audit-related nervousness in the market.