All characters created by Pixar for their films are actually owned by Disney. Disney retains the rights to make sequels to any Pixar film, though Pixar retained the right of first refusal to work on these sequels.
In 2004, when negotiations between the two companies made a spilt appear likely, Disney Chairman at the time, who was Michael Eisner, put in motion plans to produce Toy Story 3 at a new Disney studio called Circle 7 animation.
Jim Herzfeld wrote a script for Circle 7's version of the film. It focused on the other toys shipping a malfunctioning Buzz to Taiwan, where he was built, believing that he will be fixed there. While searching on the Internet, they find out that many more Buzz Lightyear toys are malfunctioning around the world and the company has issued a massive recall. Fearing Buzz's destructions a group of Andy's toys (Woody, Rex, Slinky, Mr. Potato Head, Hamm, Jessie and Bullseye) venture to rescue Buzz. At the same time Buzz meets other toys from around the world that were once loved but have not been recalled.
In January 2006, Disney bought Pixar in a deal that put Pixar chiefs, Edwin Catmull and John Lasseter in charge of all Disney Animation. Shortly after this, Circle 7 Animation was shut down and its version of Toy Story 3 was cancelled. the character designs then went into the Disney archives. The following month, Disney CEO, Robert Iger, confirmed that Disney was in the process of tranferring the production to Pixar. John Lasseter, Andrew Stanton, Pete Docter and Lee Unkrich visited the house where they first pitched Toy Story and came up with the story for the film over the weekend. The films release date was then moved to 2010.
