Technically, I believe as long as you kept the serial numbers filed off of things you didn't create, you can use your own characters from CoH in ongoing fiction. You'd have to play a careful game along the lines of how anime often shows name brand stuff to keep CoH out of it, but it could be done.
YAY! Something I can actually speak with full knowledge on!
FANFICTION (e-published, no profit): Fan fiction has always been permitted and encouraged in COH, and I very, very much doubt given the precedent of allowing it, NCSoftcore could get away with turning around and banning it. If you want some place to post stories, may I suggest the RPCongress site
www.rpcongress.com as one place I know specifically created for posting it. There's about 20 novels worth of stuff there already and I, personally, would LOVE to see the fiction sections come back to life.
DERIVATIVE FICTION (e-or-paper published, for profit): BIG nono. Star Trek and Star Wars, for instance, allow metric tons of fanfiction to be published, but the second you put your Lulu-published or Scribid-e-published Star Trek or Star Wars novel on Amazon or iTunes for sale, they will hit you like a bag of hammers from orbit. There will be nothing left of you but a little hole in the ground. I suspect the same will happen with NCSoftcore. Always remember, they have lots of lawyers just sitting around like hellhounds waiting to be unleashed. You....don't.
SORTA KINDA DERIVATIVE FICTION IN A NEW SETTING: Done this, as some of you are aware. We took some of our old CoH characters, revamped them, removed EVERY SINGLE TRACE of CoH from them, put them in a new setting and made first a podcast, then a 5 novel series with them. Or, in another genre,
Fifty Shades of Grey was once
Twilight fanfiction. The author of that underwent the same scrubbing procedure when it became wildly popular and she was invited to do Real Publishing. Now...you must be vigilant about removing every single trace of CoH from your characters and setting. We don't even call our characters Heroes, we call them Metahumans. And your setting must be original (or at least nothing like CoH). But this is a well-established route for writing and as long as there is nothing NCSoftcore can point to and say "that is indisputably ours" you are free and clear to navigate. Now as it happened, since we still HAD a Paragon Studios to talk to at the time, when we sold the novels, I went to Paragon and said, "Hey, we got a contract on this, and since our characters began their life in CoH, how about if we cross-promote?" thus neatly deflecting any possible shadow of trouble for the future, since they loved the idea. (I actually think they got more advertising out of it than we did

) In future cases...I am going to say that you are still probably not going to get any grief out of it, so long as you are vigilant. At this point there is a fair amount of superhero prose fiction out there, and I very much doubt that the legal department of NCSoftcore is going to be scouring the bookstalls, hunting for stuff that
might have been derived from City.
HOWEVER: Marvel and DC will be looking for things that infringe on their trademarks. So be just as vigilant about making sure you don't step on
those capes. Be especially careful of heroic names. (You would not believe how many times we have had to rename someone because there was a DC character with the same name in Issue #27 of Obscure Justice Teamups).