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I did a bit more research, and found this article. Some quotes:

Since copyright law prohibits the substantial use of a copyrighted work without permission of the copyright owner, and because such permission is highly unlikely when the use is to create a parody, it may be necessary for the parodist to rely on the fair-use defense to forestall any liability for copyright infringement. However, the fair-use defense if successful will only be successful when the newly created work that purports itself to be parody is a valid parody.

The courts have continually struggled with parody cases when ascertaining whether a particular parody falls within the parameters of fair use or is instead copyright infringement. The fair use section of the Copyright Act specifically enumerates criticism as one of the purposes for which the fair use defense was contemplated, but should this imply that a parody should have more extensive latitude than other types of creative works when the fair-use defense is invoked?

And this was supposed to be on my previous message, but I messed it up:
#include <IANAL.h>

More detail below:
Publaw.com

Not necessarily. It's a very contested area, legally. It depends on the photograph and purpose of publication. In this particular case, it's very questionable at best, and most likely an actionable breach of privacy (in the US). While the photos were taken in a public place, the Lifeguards were the intended subjects, not incidental ones (they were't shooting the beach or sunset, etc) and the photos were not intended for news reporting purposes (the article strongly implies they were in fact intended for sexual titillation). Here is a good primer on American law on the subject (since you're an American I assume you're speaking of US law).

Just the other day, the nuremburg website (that had "wanted" posters of certain doctors and put a red X through them if they were killed) was finally shutdown.

Soldier of Fortune magazine was found guilty of wrongful death by publishing a small ad offering hitman services. Read more about publisher liability.

There is a place where free speach fears to tread.

• Mopheus, who is now using the restamped Gnucleus software, is on a true P2P network, and it would be next to impossible to shut them down.

Here's the danger.

• It can easily be shown that most Kazaa traffic is copyrighted material. They need to use the Sony VCR defence that there are non-infringing uses and avoid falling into the Napster trap of admitting control over the network.
• They've flat out blown it on the second point, and are completely boned. Morpheus on the Kazaa network was doomed. They were going to get found guilty of contributory infringement for sure.
• Now they're on Gnutella. With the same users, doing the same activities.

Can you see the way this would look to a court? Picture a restaurant where mobsters meet, cleaning their guns and jawing about how many cops they've whacked. The restaurant owners hear that the FBI are filming the restaurant, ready to make a bust. So then they put on blindfolds and earplugs and say "Oh, but now we don't know what our customers are doing. I think we've got a large party of nuns in tonight, I can't really tell with this stuff on."

Pretty weak defence? I think so. And the nasty-nasty is that now Morpheus is just another Gnutella client, so if Morpheus does go down, why should any client - or specifically any client developer - be let off. Because they're not making money, I hear you say. Because it's just like making copies for friends and family. It's fair use.

No it damn well isn't. If I hear one more Slashdotter claim that personal/friends/family copies are "fair use", I will quite seriously bust a gut. Here are the allowable purposes for making a copy of a copyrighted work: (1) criticism and comment, (2) parody and satire, (3) scholarship and research, (4) news reporting and (5) teaching. Don't argue this with me, quote a specific case of a court saying that copies for friends and family are OK. Any judge that drew the line in the sand and said that Gnutella was OK because it's not commercial would have the MPAA/RIAA would asking for his or her head on a plate, and I'm not talking rhetorically.

Morpheus joining the Gnutella network is the best move possible for Morpheus - and the worst move possible for Gnutella. This one is going to get ugly.

The Great Rogerborgio will use his mysterious powers of prediction to determine what will happen in this debate:

• Much confusion between strictly limited copyright on specific content (good), unlimited time copyright (bad), the protection of ideas (very bad) or even the protection of markets (pronounced "corruption").
• Kindergarten comments about how you need to pay for content, or you won't get good content. Flick through your 100 cable channels. Find the one channel with quality original (first showing) content. Explain why you are paying for 100 channels at that moment, or why the good content should only get 1% of your money. You're not paying for content, you're paying for access to 100 channels running commercials intersperced with "content breaks" to keep your eyes on the screen. The model is already broken. Advertisers or marketing execs decide how much money we're going to give them, then the content producers churn out exactly enough content to convince us that we've got our money's worth.
• Much ranting about fair use by people who have never so much as read a brief overview of it, and who probably don't even know how copyright actually works.
• "Write your elected representatives" / "Don't write your elected representatives, they're all corporate whores, do XYZ instead" / "Stop writing this on here and go do something useful" / "No, you go do something useful" / "No, you go do something useful" (...)
• Much sound and fury about IP in general, none of which will translate into WIPOUT essays.

Flame away, but far better if you get over to WIPOUT and actually write it down where someone other than the /. regulars might read it.

The Great Rogerborgio will use his mysterious powers of prediction to determine what will happen in this debate:

• Much confusion between strictly limited copyright on specific content (good), unlimited time copyright (bad), the protection of ideas (very bad) or even the protection of markets (pronounced "corruption").
• Kindergarten comments about how you need to pay for content, or you won't get good content. Flick through your 100 cable channels. Find the one channel with quality original (first showing) content. Explain why you are paying for 100 channels at that moment, or why the good content should only get 1% of your money. You're not paying for content, you're paying for access to 100 channels running commercials intersperced with "content breaks" to keep your eyes on the screen. The model is already broken. Advertisers or marketing execs decide how much money we're going to give them, then the content producers churn out exactly enough content to convince us that we've got our money's worth.
• Much ranting about fair use by people who have never so much as read a brief overview of it, and who probably don't even know how copyright actually works.
• "Write your elected representatives" / "Don't write your elected representatives, they're all corporate whores, do XYZ instead" / "Stop writing this on here and go do something useful" / "No, you go do something useful" / "No, you go do something useful" (...)
• Much sound and fury about IP in general, none of which will translate into WIPOUT essays.

Flame away, but far better if you get over to WIPOUT and actually write it down where someone other than the /. regulars might read it.

• I thought that satire counted as fair use of copyrighted material

Yeah, it sucks that there's not some some huge global information network where we could go to learn about fair use issues rather than just speculating about them.

Goldmember falls flat on 2 out of 4 fair use criteria. Fair use is an exception to the very clear copyright law, and it's a civil action, so it's "balance of probabilities" not "beyond all reasonable doubt". It's not prior restraint on publication either, as the name is already being used in marketing (c.f. the recalled material). The copyright owners are well within their rights to take this action, and Mike should have been ready to defend it from day one.

It's no big whoop though. We're looking at a quick out of court settlement, balanced against free publicity for both franchises. A couple of PR guys lose out... unless the whole issue is a well managed PR stunt to scam publicity for all parties.

For the benefit of the hordes who will post "I thought satire/fair use yadda yadda yadda", don't speculate, go and read about it.

There is a specific codification of fair use for parody or satire, but satire alone is not automatically enough to protect you.

The factors relevant to this case are:

• Commercial/non commercial. Goldmember is a commercial production. This counts against it.
• Nature of work. Goldmember is "creative" rather than "informational". This counts against it.
• Amount of copyrighted work used. Probably just a small member. This counts for it.
• Effect on potential market or value of the copyrighted work. Minimal, I'd have thought. Goldmember won't compete directly with Goldfinger, nor will it cheapen a franchise that includes characters like Pussy Galore and Dr Goodhead. This counts for it.

Prima facia, it's about 50-50. Mike is trading on someone else's idea for profit, but in a small way compared to his original content. Using the character in the title was rather asking for it though. Mel Brooks got away with that, and with significant use of Star Wars material in Spaceballs, because he also parodied at least another 21 sources, and used his borrowed characters to perform a fair amount of critical commentary ("moichandising, moichandising").

Remember that but fair use is an exception to the law, and as Mike is clear about where he's taking his material from, it really is up to him to prove his innocence. He shouldn't have much trouble doing so, and this is likely just a well timed gambit to land a quick out of court settlement, one that the Goldmember people really should have anticipated and prepared for. But heck, it lands them free publicity, so the only losers here are a few PR executives.

(Incidentally, I agree with other posters that this article really is -1 Offtopic. If we really care IP issues, then why not run my submission on how all the sound and fury about IP on Slashdot has failed to translate into actual support for the WIPOUT essay competition. For gods' sake, all you have to do is CC your usual Slashdot rants to them!).

Starballz claims this is a parody. Really? Parody, says Websters is "a literary or musical work in which the style of an author or work is closely imitated for comic effect or in ridicule." Case law shows that criticising or commenting on the original is also fair use (although not necessarily parody).

Having your own original characters do a Matrix freeze-orbit scene is parody for comic effect (please, enough, stop doing this now). Borrowing the characters, but spoofing twenty two other works and making very cutting critital points about "moichandising, moichandising" leaves you mostly clear, as Mel Brooks showed, and in agreement with the very informative overview of fair use and parody laws at publaw.com

But this... well, I dunno. It's commercial, it's not commenting or criticising that I can see (not is it primarily comic per se, it's part of a well defined genre of its own, like musical), it uses substantial portions of the original (characters, scenes and plot). That only leaves the effect on the original which is, to be fair, minimal. But in three out of the four criteria that a court should use to decide fair use, it appears to fall down.

Perhaps it does comment on or criticise the original. Of course, we'd have to watch it first to find out. And perhaps Lucasarts should have done so too:

• Their disregard for legal procedure is underscored by the fact that Lucasfilm's attorney admitted that he did not even watch Starballz prior to filing suit

It's hard to sympathise with a lawyer getting bitchslapped at the best of times, but this, if true, is probably karmic enough to cancel out any actual moral transgretion.

"Sesame Street has always stood for mutual respect and understanding," a spokeswoman said. "We're outraged that our characters would be used in this unfortunate and distasteful manner. This is not at all humorous.The people responsible for this should be ashamed of themselves. We are exploring all legal options to stop this abuse and any similar abuses in the future."

Now tell me exactly what are they going to do? Sue some random guy at a protest on the other side of the world?

Or maybe they've forgotten that parody is a protected form of fair use and free speech.

-S

Ok.. I just checked the acutal law and there is nothing in it mentioning pariodies, but there have been several Suprime Court cases. Go to http://www.publaw.com/parody.html for a good discussion on the topic of parodies. Also check out Copyright Law of the United States of America

-After you read, then post