The part that has attracted the most attention in fandom circles has been Section 7: Submissions, User Generated Content, DMCA Takedown Notices. So what does this term mean?
First, 7A asserts that you have no expectation of compensation for any ideas or materials submitted to Disney. This is an important rule of thumb: Always be careful when submitting ideas or materials to anyone, not just Disney!
7B then goes on to discuss user generated content (“UGC”). It defines UGC as content by users that Disney “asks for” or “allows.” This refers to be content uploaded to Disney’s platforms, sites, and such. What do Disney’s terms mean when they say they cover content uploaded to third-party platforms “integrated” with Disney? This seems to refer to Disney platforms that you can get through various devices and tools such as Xbox, Apple iOS, or Android. Of course, we can’t promise that Disney won’t try to assert these terms over content posted elsewhere–but the law limits their ability to succeed in that sort of broad assertion.
Disney’s terms appear to refer to two categories of UGC made available via these platforms:
(2) The other type of UGC referenced in the terms is UGC that Disney has “authorized” users to post, upload, distribute, display, or perform that incorporates Disney’s copyrighted works. Although we can’t be sure, this probably refers to works that Disney has invited or challenged users to create and post. In that situation, Disney asserts that it has granted a license for that use of its copyrighted works within the UGC, with the condition that all rights in the resulting derivative work UGC is assigned back to Disney. The terms go on to state that a refusal to assign the rights in the derivative work to Disney would result in Disney revoking the license to use its copyrighted works in the UGC. Like the first category, this term is unusual in its breadth.
But it is important to note that not all uses of Disney’s copyrighted works in UGC require a license from Disney. You do not need a license to create any derivative work that would be protected by fair use, and it is the OTW’s position that noncommercial fanworks are creative and transformative works protected by the fair use doctrine. Therefore, Disney’s terms grant your UGC a license on the condition that you assign all of your rights to Disney; but not all UGC requires that license in the first place. In that case, revoking the license would just mean that ordinary copyright law, including fair use, governs the UGC.
What’s the tl;dr here? If you post something on a Disney platform (website, app, service, etc.), Disney’s terms are likely to be enforceable. However, we do not believe Disney’s one-sided assertion of control over anything it “allows” is broadly enforceable. If you post something on a non-Disney platform without doing anything to agree to Disney’s terms, then copyright and trademark law, including fair use, provides the rules.