More About IP, Freely: Copyright vs. Trademark vs. the EULA Contract
(The following is a post from the official CoH fora. A player had had a character named after but otherwise dissimilar to a Marvel character generic'd and was asking why. While the context of our current problem is different, the legal issues are still important.)
There are really two issues here, the EULA/culture of enforcement and why names of existing characters are generally off-limits. The EULA, as enforced by the GM's, is just an agreement between player and game provider. It could be written to require or prohibit almost anything. But for our purposes here, what's important is that it's written to provide that (1) players can't use the game to infringe other people's intellectual property rights and (2) to make sure they don't, GM's can generic characters that they think might do so, even if a court might make a different conclusion.
It's that second part that brings in the second issue, and it's one about which a lot of misinformation is flung, so let's consider it now.
Do Your Part To Keep Geekdom Popular Culture Accurate and distinguish between copyright and trademark. Most characters that get described as "copyrighted" are covered by both.
A "trademark" is the right to use a word, phrase, or more or less single image in connection with some specific use. For example, Taco Bell has a trademark on the name "Taco Bell" in connection with restaurants. If a bellmaker decides to market his bells as "Taco Bells," Taco-Bell-the-restaurant-company would probably either demand they pay him for the use of the name or sue him to get him to stop, despite the fact that their use is ostensibly limited to restaurants. If the case made it to court, the finder of fact would consider whether there is a "likelihood of confusion" between Taco-Bell-the-restaurant and Taco-Bell-the-bells such that a person might think the two were connected.
A "copyright" is a group of rights that cover a specific work of art, such as a comic book, movie, novel, or video game. The right in question here is probably the right to make derivative works. Say that, in a fit of total insanity, I want to make a movie called Ben-Hur Part II: Ramming Speed! I cannot do this without buying or otherwise getting the right to make a derivative work of whoever holds the right to the original work, Ben-Hur. (This is an especially interesting example because the original movie itself is an adaptation, another derivative work, from a novel.)
Now, finally, we can come around to the discussion of what these fora mean by "copyrighted character." As the discussion above should show, you can't really copyright "a character" in the abstract because copyrights apply only to specific works, not the elements of which they're composed. "But if that's true, Olantern," I hear you cry, "why can't I make Ap0calypse as an in-game character?" There are two reasons.
The first, simpler one is that you're potentially violating Marvel's trademark in a superpowered character named Apocalypse, even if your Ap0calypse has a zero in his name and looks nothing like the Marvel one. Would a reasonable, non-comic-maven person think your character and Marvel's were connected? It seems likely.
The second, subtler reason is that by taking a character who's appeared in a copyrighted story whose rights are owned by Marvel, you're potentially making an unauthorized derivative work of that copyrighted story. Note, too, that the fact that you're presumably not trying to take any of Marvel's business away doesn't enter into either of these considerations.
There are lots of exceptions and permutations to both these bodies of law, but those are the basics. One exception mentioned already in this thread is that works can fall into the public domain over time and thus lose copyright (though not trademark) protection. I'd just like to say here that popular culture tends to misunderstand and often overstate the scope of exceptions to those rules, so don't rely on them without consulting an attorney. (In fact, that last bit of advice goes for everything in this post.)
Now, let's bring this back to Thor, since he comes up so often in these discussions. We're dealing with three things. First, we have the "idea" of Thor, a Norse god of thunder with power over lightning and such. No one holds any enforceable rights in just that idea. (While there is a body of law called the "law of ideas" that theoretically covers this kind of thing, those laws are weak, and Thor the thunder god is presumably public domain or its equivalent for purposes of this discussion.) Second, we have Marvel's trademark on Thor, a blond-haired Asgardian superhuman quasi-deity who fights villains and appears in comic books and derivative media. Third, we have the zillion copyrights on every Thor-the-superhero story ever published in any medium. For instance, Marvel holds a copyright in the story contained in THOR #350, "Ragnarok and Roll!"
With all that in mind, imagine that a player makes a character named "Thor." This Thor has blue skin and is a villain earth/forcefield controller, and his biography states that he's an alien from the planet Zarx using his natural powers to steal all the gold on earth. Very different from any of the Thors mentioned in the last paragraph, right? So why does a GM generic the character when he spots it?
Hopefully, based on the rest of this post, you can see why. First, while the player could argue, perhaps successfully, to a court that no one would confuse villaintroller-Thor-from-Zarx with Marvel Thor, it's just as easy to argue that someone could. (Think about your non-comics friends, the kinds of people who say, "I don't go to those movies because they're so silly.") Second, even if the player wins that argument, villaintroller-Thor-from-Zarx might be derived from one of the copyrighted works about Marvel-Thor that are out there. (The argument might run something like, "Why else would someone call a supervillain 'Thor' except to reference the superhero Thor?" I'd call this a losing argument, but it isn't a frivolous one.) And, most importantly for the player, the mere possibility that those arguments could be raised are sufficient reasons for a GM, who probably doesn't even know this legal abstraction stuff anyway, to generic the character, because the EULA allows for exactly that. A concern is all the GM needs, not an airtight legal argument.
Those are the issues in a nutshell. Sorry for the long post; I didn't mean to write a treatise when I started. I hope people found that interesting, or at least helpful. (Disclaimer: Nothing contained in this post should be taken as legal advice. If you actually need legal advice, consult an attorney. I just read recently that there's one for every 256 people in the U.S., so there are plenty out there.)
(A follow-up post about registering trademarks:)
Trademarks do not need to be registered with the Patent and Trademark Office in order for the trademark to be protected, but registration is common and preferable to non-registration. Even in the present climate of IP nervousness that permeates the content-production world, many character names and similar designations are not registered trademarks. You can tell the difference between a registered trademark and a non-registered, or common law, trademark by the presence or absence of that "R" in a circle; the "R" stands for "registered."
Registration, however, is prima facie evidence of a mark's validity. Referring back to my Taco Bell example from my first post in this thread, imagine Taco Bell the restaurant sues Taco Bell the bellmaker for violating its "Taco Bell" trademark, but the trademark is not registered. In that case, the restaurant would have to present evidence in court that its mark was actually used and recognized to distinguish its restaurants before even reaching the issue of whether the bellmaker's use of the same name resulted in a likelihood of confusion. If the trademark were registered, that first step of presenting that evidence wouldn't be necessary.
Why, then, don't entities register every single potential trademark? First, as this thread has hopefully demonstrated already, a particular trademark is generally limited in scope. This can run into a lot of registrations if, say, Lucasfilm tried to register the name of every single one of its characters in ever possible medium of as a trademark. I should add that most content creators above a certain size tend to stick a "TM" (designating something as a non-registered trademark) after every distinctive name in their IP's. I'm not aware of any cases where someone tried to litigate the validity of such a trademark extensively, so the "TM" may ultimately establish more for the trademark asserter's peace of mind than for his actual, legal rights.
While I'm discussing registration, I should also mention registration of copyrights. When discussing a work, it's something of a misnomer to say it is "copyrightable." While geekdom likes to attack the more recent iterations of copyright protection (the ones with terms of "life plus X years"), one thing that they did for both large and small copyright holders was to make copyright protection inherent. Once a work is set in some fixed form, copyright protection attaches to it automatically, without any registration necessary. For these purposes, even a draft or a work in progress counts as "fixed," by the way; "unfixed" works are essentially just "ideas."
Registering a copyright with the Library of Congress (not the PTO) again provides prima facie evidence of the existence of the copyright. In some industries, such as publishing, it is accepted that works aren't registered upon creation by the author (early in the creative process) but upon publication by the publisher, in the author's name (late in the process); the inherent protection of copyright law is seen as sufficient. In fact, budding authors are often told NOT to register copyrights in their works because disreputable scam artists of various stripes may use the registration information to target them.