A recent law case filed by the Sir Arthur Connor Doyle estate highlights protectability of fictional literary characters. Paul D Supnik, of counsel to Rufus-Isaacs, Acland & Grantham LLP was recently quoted on this issue in an Associated Press article discussing this lawsuit.
http://bigstory.ap.org/article/writer-doyle-estate-dispute-copyright-sherlock
An anthology of stories by contemporary authors was created using certain Sherlock Holmes characters sparked a declaratory judgment lawsuit to determine that there was no copyright infringement. Some characters, according to a decision in the lawsuit by a United States District Court in Chicago were found to be in the public domain because the copyright had expired, while others still protected by copyright. So long as the characters used were in the public domain, no copyright infringement claim could be sustained.
According to the copyright law, literary characters can be protected if they are sufficiently delineated. Ideas are not protectable under copyright law. Only the expression of an idea can be copyrighted. Insufficiently delineated characters are essentially ideas and not protected. A perennial question is to what extent must a fictional character be described, such as by its personality characteristics, dress, appearance, actions, interactions with other characters and other specific features that are dealt with in a literary manner. Once protection is established, how can you tell if a character has been infringed if various elements of the identified character no longer appear in the would be infringing work?
While often an academic exercise, for fictional works based on fictional literary characters, the economic value to rights holders can be a defeated by the scope of copyrightable protection against similar works. Thus, the value is reduced if there is open competition to use similar characters are those bearing the same names. Lack of exclusivity diminishes value. For example it is at least a bargaining chip by the studios to seek a reduction in a negotiated fee for purchasing rights.
Update:
The decision of the District Court was affirmed in June 2014 by the Seventh Circuit Court of Appeals. The Estate argued that the early stories in which Holmes or Watson are already in the public domain does not permit their less than fully “complexified” characters in the early stories themselves to be copied. The Seventh Circuit did not buy that argument. Alterations to a character in later works do not revive or extend the life of expired copyrights on the original characters. Otherwise this would have a tendency to potentially perpetually extend the copyright term.