Originally, a sequel was planned when it seemed that Disney and PIXAR would split over creative differences in 2004-2005. Disney started up an animation division titled 'Circle 7,' which would have been in charge of churning out sequels for PIXAR films that would not involve the original creators at PIXAR. Entertainment Weekly published an article that said the original plot for Toy Story 3 was going to be about Buzz Lightyear having a defect. Buzz would then be shipped to Taiwan to be fixed, but the other toys find out that the toy company is just replacing the broken Buzz toys with new ones, so they ship themselves to Taiwan to rescue him. This script had to be canned when Pixar and Disney made amends. Part of their agreement was not to further develop projects that had been planned during their fallout.
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