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If I were to take a well-known character from a movie or video game, lets say Super Mario, and I drew an image of him in my own art style, completely from scratch. Would I be infringing on Nintendos IP? Nintendo own the image of Mario, but I drew an image that was based on him but not created by Nintendo.

Take the images below. These are crude drawings that look nothing like the characters from the Super Mario series, yet they are identifiable as the characters. Would it be legal to sell these images as posters or tshirt prints etc? Does Nintendo own to copyright to this image because it contains characters they created even though the artwork itself is original?

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  • In addition to copyright you are likely to find that Nintendo holds trade marks on these characters too. – Paul Johnson Mar 8 at 17:42
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Copyright gives the owner the exclusive right to create derivative works. The works you describe are clearly derivative so they are unlawful without permission or a fair use exemption.

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    A fair-use example would be something like what Big Dogs (bigdogs.com) does with their specialty tees for, say, Wooferine, The Bone Ranger, or Big Dogs of the Caribbean, or their Dog Wars series -- clearly riffing on someone else's IP, but with transformation or commentary. (And they label their material as "parody.") – jeffronicus Mar 8 at 17:03
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According to copyright law, you own the copyright to your artwork as soon as you create it. But that's not the point here and not the point Nintendo will make in a lawsuit against you.

...drawings that look nothing like the characters from the Super Mario series, yet they are identifiable as the characters.

That's absurd, because they are identifiable as characters because the look like characters from Super Mario. They infringe on Nintendo because they look very similar to Nintendo's copyrighted work, and that you drew them from scratch makes no difference. The fact that you drew them to look like Nintendo's characters is the point, and is the point Nintendo would make in a lawsuit against you for copyright infringement.

In order for you to sell such artwork on t-shirts or posters produced by a printing company, you will need to attest that the work is your own and you hold the copyright. That's true. But when Nintendo sees the products, they will allege copyright infringement, because your artwork is easily identifiable as the characters from Super Mario, and you do not have a licensing agreement nor permission form Nintendo to do that.

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