Selling fan art and merch: two rights, and only one has a fair use defence

Most explanations of this topic argue about fair use, arrive at "it depends", and stop. That is the wrong end of the problem. Two separate rights sit over the same picture, and the one that removes a listing is usually not copyright.

The character is copyright. The name and the logo are trademark.

Copyright protects expression — the character as drawn and fixed in a comic, a film or a game. The owner holds the exclusive right to prepare works derived from it, and a new drawing of the character in a new pose is a derivative work. Whether yours is lawful turns on fair use, which is a defence: something you argue once a claim exists, not a permission you hold beforehand.

Trademark protects the link between a sign and a commercial source — the name, the wordmark, the logo, sometimes the character’s appearance where it works as a badge of origin. It asks one question: is the public likely to be confused about who is behind these goods. Fair use in the copyright sense is irrelevant to it. The same split, seen from the brand owner’s side, is in who owns your logo.

Why "transformative" does less work than artists think

The Supreme Court narrowed this in 2023. In Andy Warhol Foundation v. Goldsmith it held that the first fair use factor asks whether the use has a further purpose or different character, that this is "a matter of degree", and that the degree must be weighed against commercialism. The operative sentence: "If an original work and a secondary use share the same or highly similar purposes, and the secondary use is of a commercial nature, the first factor is likely to weigh against fair use, absent some other justification for copying."

Apply that to a print sold at a convention table. The original art exists to depict the character attractively; the print does the same thing, and it is sold. New expression is not the test. The Court was explicit that the transformation has to exceed what would make the work merely derivative, because the derivative right belongs to the owner.

That is why parody and commentary travel better than faithful portraiture: they serve a purpose the original did not. The honest summary for most fan art is not that it is illegal, but that it is unlicensed and the defence is weak — weaker the closer the art gets to being the product itself. Fair use explained walks the four factors.

Merch changes the trademark question, not just the scale

Expressive works have historically had some insulation from trademark claims. The Supreme Court closed that door for merchandise in Jack Daniel’s Properties v. VIP Products (2023): "When an alleged infringer uses a trademark as a designation of source for the infringer’s own goods, the Rogers test does not apply." Parody may still matter inside the likelihood-of-confusion analysis, but it no longer lets the defendant skip that analysis.

A shirt is that use. The character or name across the chest is what makes someone buy the shirt — it tells the buyer what the shirt is. The same drawing sits in a different posture on a gallery wall than on a mug. The distinction is not the money involved. It is whether the mark is doing the job trademarks exist to do.

Two things escalate matters. Reproducing the actual logo on goods the brand also sells moves the claim towards counterfeiting, which platforms treat far more aggressively. And wording implying authorisation — "official", "licensed", "collaboration" — converts an arguable position into a false-designation claim you cannot win. Real permission looks like a signed trademark licence: named marks, territory, product categories, quality control.

The public domain frees a version, not a character

Every 1 January another year of published work loses US copyright, ninety-five years after publication. That is how the 1928 Steamboat Willie Mickey became free in 2024. On 1 January 2026 the list included Betty Boop as she appears in the 1930 Fleischer cartoons Dizzy Dishes and Barnacle Bill, Pluto in his original form as Rover, Blondie and Dagwood, Ub Iwerks’ Flip the Frog, and nine more 1930 Mickey shorts.

What entered the public domain is those specific films, not the character as you picture it. The Seventh Circuit set the rule in Klinger v. Conan Doyle Estate (2014), rejecting the argument that a character keeps growing new copyright as later stories add depth: expiry is measured work by work, later additions are protected only as their own increment, and nothing in a later work revives the earlier one. Read the other way, that is the trap — every redesign carries its own term.

Disney said as much when Steamboat Willie’s copyright ran out: it would continue protecting the more modern versions of Mickey that remain in copyright, and would "work to safeguard against consumer confusion caused by unauthorized uses of Mickey".

There is a limit on that, worth knowing before anyone bluffs you. In Dastar Corp. v. Twentieth Century Fox (2003) the Supreme Court held that "origin of goods" in the Lanham Act means the producer of the tangible goods, not the author of the content, since reading it otherwise would create "a species of mutant copyright law" limiting the public’s right to copy expired works. Trademark cannot re-fence a public domain film. It can stop you presenting your goods as the brand’s — easy to do on merchandise without meaning to.

Licensed routes that actually exist

Fan art licensing is not hypothetical. Print-on-demand platforms run brand partner programmes where the rights holder has pre-cleared the property: Redbubble’s lists the participating brands, designs go through review before sale, and the permitted products are limited per brand. That is a genuine licence rather than tolerance, and it removes the takedown risk for anything on the list. Check it before drawing, not after.

Some rights holders also publish fan content policies permitting non-commercial use, occasionally small-scale commercial use. Those are unilateral permissions and withdrawable. Selling through a platform separately means accepting its marketplace terms, which let it remove listings and close accounts on its own assessment.

Enforcement arrives as a takedown, not a lawsuit

Rights holders rarely sue individual artists. Litigation is slow, expensive and bad publicity for a modest recovery; a notice to the platform costs nothing and works within a day. That economic fact shapes everything here — and the route back depends entirely on which right the notice claimed.

Etsy states this plainly: it accepts counter notices for copyright reports only, not for non-copyright claims. That asymmetry is the practical core of the subject. Keeping the brand name and logo off a listing does not only lower the chance of a complaint — it keeps any complaint inside the one framework that gives you a reply. DMCA takedown and counter-notice has the mechanics.

The counter-notice has a price. Section 512(g) requires a statement under penalty of perjury and consent to the jurisdiction of a federal district court, plus agreement to accept service there. You are volunteering a forum. Section 512(f) cuts both ways: knowingly misrepresenting that material infringes, or that it was removed by mistake, creates liability for damages and fees.

Weigh that against the exposure. Statutory damages under 17 U.S.C. § 504(c) run from $750 to $30,000 per work, rising to $150,000 where infringement is proved wilful and falling to $200 for a genuinely innocent infringer. Those ceilings are why the practical answer to a notice is almost never to argue. Repeat reports also cost the account rather than the listing.

The decisions that actually move your exposure

The tolerated zone is real, but nobody owns it. Rights holders benefit from fan work and mostly leave it alone — until a property changes hands, a licensing deal lands, or an enforcement contractor starts sweeping a marketplace. None of that turns on the merits of any listing. An artist who kept the drawing separate from the brand loses a listing. One who built a shop name out of somebody else’s trademark loses the shop.