Disney has dropped attempts to trademark the traditional Mexican Day of the Dead festival for the purposes of a new Pixar animated film following angry online protests.

Critics took to social media after it emerged that the studio was applying to trademark the term "Dia de los Muertos" for merchandising purposes. Disney-owned Pixar's film about the famously macabre November celebration was announced in April last year. It does not yet have a title but will be directed by Toy Story 3's Lee Unkrich.

In its trademark applications, Disney wanted exclusive domain for goods including "fruit-based snack foods", "Christmas-tree ornaments and decorations", "decorative magnets", "non-medicated toiletries" and "frozen meals consisting primarily of pasta or rice", as well as for education and entertainment purposes. Anger was sparked among the US's Mexican-American community, for whom the Dia de los Muertos festival is a popular and colourful occasion on which to remember and honour ancestors. A combination of the Roman Catholic All Souls' Day with indigenous Mexican beliefs and practices, the festival often sees families decorate the graves of relatives or build elaborate shrines at their homes.

Lalo Alcaraz, a Mexican-American cartoonist best known as the creator of the comic strip La Cucaracha, tweeted: "On the offensiveness scale, it seems awful and crass, as the words 'Dia de Los Muertos' aren't just some brand name but a holiday."

"Has anyone else heard anything about this? It has to be a hoax! How can you trademark a cultural tradition?" tweeted Kathy Cano-Murillo, an Arizona-based artist and author who incorporates Day of the Dead designs into her art.

Disney later issued a statement suggesting it had been decided to change the title of the film, and would therefore no longer be pursuing efforts to trademark the term. "As we have previously announced, Disney-Pixar is developing an animated feature inspired by the Mexican holiday Dia de los Muertos," the statement read. "Disney's trademark filing was intended to protect any potential title for our film and related activities. It has since been determined that the title of the film will change, and therefore we are withdrawing our trademark filing."

Pixar's Day of the Dead film is one of a number of new movies with more adventurous themes that the company hopes will turn around its fortunes following the lukewarm response to recent efforts such as Cars 2 and Brave. It is also planning a film based inside a young girl's mind titled Inside Out. Prior to those films the firm will release sequels to Monsters, Inc (Monsters University, due in June) and Finding Nemo (Finding Dory, due in 2015) as well as a movie set in prehistoric times titled The Good Dinosaur (2014).