Basically the Copyright laws stop people from copying stories/media/code(compiled or not)/images which belong to someone else... effectively someone is protecting the idea from others, however you can get around this pretty easily.
the main idea with computer games and copyright infringement when your making a fan game is actually that they don't want you to tell your own story of the game, as
a) this can ruin storylines they've already come up with
b) it would be benched as another game in the series by people who see it and if it is bad then this would affect the orignal company NOT the developers.
for example if i made a Doom Clone based in the same universe but it was just really really bad, like say the zombies hugged you and such... and the graphics were 2pixels laced together with a few texel
then although i'd be panned for it, this would also reflect badly upon ID for allowing me to take thier story and murder it.
remember alot of these games and such are created by artists who REALLY dislike anyone else telling thier stories for them, because its thier vision not someone elses.
however more oftenly nowadays it isn't the development companies that kick up a fuss about it, but the publishers ... and to be honest i'm yet to figure out why - because if you give away a game then they loose no money, and they aren't the ones who look bad if it goes belly up, infact the only problem they could have is that the general idea of the media used is their legal property.
It is an understandable affair if its say like a Super Mario Clone which is supermario and all of the sprites are ripped from the orignal game and such ... however when you have a game like Bid For Power, it make little to no sense why Funimation had a problem with them creating thier own representations of the characters from Dragonball Z.
I mean no one was charging anything, so no lost revenue. The game was just a bit of fun and actually more sure to the series than almost any of the current Dragonball games i've ever seen - fan or retail ... however they slapped a cease&desist order on the guys which kinda broke thier spirit about the game and did slump the development by almost 8months.
unfortunately copyright laws prevent you from using the stories and characters within those stories without permission from the owner of the copyright - for example Core own the copyrights to Tomb Raider and Lara Croft, so if you want to make a game with her name then i'd have to ask them ... however if i just wanted to use the model of her i made, then i don't have to. She could look identical, however it isn't the look they've copywritten but the name.
so it is always good to know what is copywritten and what isn't...
personally i think someone needs to just stand up and say "f**k ya'll i'm gonna finish making my fan game which is all my work and i'm not charging for, this is being done in my spare time and if you want me to stop then you can take me to court."
because that would actually be far more damaging on them than yourself, as copyright laws only allow then to sue you for upto 10x one years wages ... and oftenly you're allowed to spread this payment out over several years or take 6months in jail.
and although that may damage your reputation and criminal record and such, it would force the gaming world to stand up and finally say...
"hey what the hell did he actually do wrong? he didn't pirate the software, he wasn't earning off your idea, he just made something for everyone to enjoy."
to be honest i doubt they'd even want to push to take it to court, because it would be extremely damaging.
funimation have stopped quite ALOT of freelance projects based on the series they own (which to be honest thankfully for those in the UK they have zero juridiction, but due to word of mouth about what they do so many db/z/gt or gundamn projects were scrapped)
however this has damaged thier reputation so much over the past few years, including a lawsuit they filed against Cartoon-NetworkUK which has lead to them loosing out on alot of work.
i mean as has been said as long as your not big enough to be noticed your pretty much left alone because they don't go looking - unfortunately if you want to make something worthwhile then it will be big enough to notice.
Tsu'va Oni Ni Jyuuko Fiori Sei Tau!
One block follows the suit ... the whole suit of blocks is the path ... what have you found?