I'll just throw in my two cents on this considering I make most of my living off of fan art commissions.
Basically fan projects, for the most part, fall under, or very close to the "Fair Use Agreement," where you are allowed to use an existing IP or assets from an existing IP to a certain extent if the purpose is for educational (one could even argue self-educational), parody (primarily where fan games would technically fall), or critical and reviewing purposes (analyzing the content critically to write a review or an article on it). After the dawning of Let's Plays, things became VERY muddy and gray in this area, as things have just become very unclear. It essentially boils down to the discretion of the companies themselves to take action, and what action to take at that.
However, clear emulation or recreation attempts at existing IPs, especially with Nintendo, are an area of VERY thin ice. Fan games themselves are also another monster entirely because they are a product that could potentially threaten the business of the people they're paying homage to. An example of this being done successfully, however, is Dragon Ball Z Abridged. TeamFourStar actually seems to have a fairly balanced and amicable relationship with Toei Animation and other owners of the Dragon Ball IP, likely due to them, while yes, using direct assets from the show, making it an almost entirely different retelling of the story. However, in a recent happening, a representative of Toei Animation had TFS remove two DB related posters (one was a DBZA poster) from their booth at a convention. It was very polite and civil from what I understand, but it was also essentially Toei reminding TFS of their position.
If you're going to make a fan game of a Nintendo IP, you need to be careful. Nintendo is very defensive of their IPs, and they'll flex their power at the slightest uproar. However, it also seems that they wont' strike a project until it's essentially finished, unless it is blatant copyright infringement (i.e. rom distribution or an emulation-rom hybrid like Pixelmon for Minecraft). And even then, they are fairly gentle in this regard, and I think they know what they're doing. They let the games be distributed for at least a day or so before issuing a DMCA notice, and at that point it's pretty much too late to stop their distribution across the internet anyhow. And they're only issuing DMCAs, they're not taking fangamers to court.
I guess to sum it up, splicing in a few bits of info from Reggie in an interview...if you make a fangame of their IP, and they (meaning moreso the legal and corporate divisions) think it might influence the direction of the IP in consumers' minds, they'll politely tell you, "Okay, you've had your fun, people get to experience your project, so we're just gonna ask you to put it away now." It sucks, but it's in their legal right.
Fan games are...technically legal to an extent. As long as you're distant enough from any official work (aka in the realm of parody), you're not breaking any laws. It gets muddier the more faithful you strive to be to the source material until it's almost indistinguishable. This doesn't mean you're safe from the IP owners coming in and telling you to stop either, but they're probably not going to sue you. And if your tribute turns into a recreation or a profit venture, you've crossed the line of legality, and companies are probably going to come at you hard and fast about it.
The way I look at it in my work is like this: Different enough that it won't even be remotely mistaken for official = OK! Similar to source material, but not directly copying anything that already exists = Middle ground/thin ice Emulating/mimicking/recreating an existing piece of art, game, film, or music = Probably not OK!
I'll just throw in my two cents on this considering I make most of my living off of fan art commissions.
Basically fan projects, for the most part, fall under, or very close to the "Fair Use Agreement," where you are allowed to use an existing IP or assets from an existing IP to a certain extent if the purpose is for educational (one could even argue self-educational), parody (primarily where fan games would technically fall), or critical and reviewing purposes (analyzing the content critically to write a review or an article on it). After the dawning of Let's Plays, things became VERY muddy and gray in this area, as things have just become very unclear. It essentially boils down to the discretion of the companies themselves to take action, and what action to take at that.
However, clear emulation or recreation attempts at existing IPs, especially with Nintendo, are an area of VERY thin ice. Fan games themselves are also another monster entirely because they are a product that could potentially threaten the business of the people they're paying homage to. An example of this being done successfully, however, is Dragon Ball Z Abridged. TeamFourStar actually seems to have a fairly balanced and amicable relationship with Toei Animation and other owners of the Dragon Ball IP, likely due to them, while yes, using direct assets from the show, making it an almost entirely different retelling of the story. However, in a recent happening, a representative of Toei Animation had TFS remove two DB related posters (one was a DBZA poster) from their booth at a convention. It was very polite and civil from what I understand, but it was also essentially Toei reminding TFS of their position.
If you're going to make a fan game of a Nintendo IP, you need to be careful. Nintendo is very defensive of their IPs, and they'll flex their power at the slightest uproar. However, it also seems that they wont' strike a project until it's essentially finished, unless it is blatant copyright infringement (i.e. rom distribution or an emulation-rom hybrid like Pixelmon for Minecraft). And even then, they are fairly gentle in this regard, and I think they know what they're doing. They let the games be distributed for at least a day or so before issuing a DMCA notice, and at that point it's pretty much too late to stop their distribution across the internet anyhow. And they're only issuing DMCAs, they're not taking fangamers to court.
I guess to sum it up, splicing in a few bits of info from Reggie in an interview...if you make a fangame of their IP, and they (meaning moreso the legal and corporate divisions) think it might influence the direction of the IP in consumers' minds, they'll politely tell you, "Okay, you've had your fun, people get to experience your project, so we're just gonna ask you to put it away now." It sucks, but it's in their legal right.
Fan games are...technically legal to an extent. As long as you're distant enough from any official work (aka in the realm of parody), you're not breaking any laws. It gets muddier the more faithful you strive to be to the source material until it's almost indistinguishable. This doesn't mean you're safe from the IP owners coming in and telling you to stop either, but they're probably not going to sue you. And if your tribute turns into a recreation or a profit venture, you've crossed the line of legality, and companies are probably going to come at you hard and fast about it.
The way I look at it in my work is like this:
Different enough that it won't even be remotely mistaken for official = OK!
Similar to source material, but not directly copying anything that already exists = Middle ground/thin ice
Emulating/mimicking/recreating an existing piece of art, game, film, or music = Probably not OK!
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