Marvel is suing City of Heroes’ makers for copyright and trademark infringement. What’s that, you say? The game doesn’t have any Marvel characters or lookalikes built-in? Of course not—they’re suing because it’s technically possible for players to design a character with a similar costume and use a similar name. Sure, it’s against the terms of service, and they try to stop it when they find it, but people do it anyway.
But note: the game makers aren’t the ones doing the infringement. As I understand it, the character designer is rather like HeroMachine: you pick a body type, colors for different parts of the costume, accessories and masks, etc. So sure, you can create a brick, make him green and give him purple shorts… but it’s not as if they built in textures and symbols specifically to make a Spider-Man costume.
I’ve only read about half the comments on the thread where I found this, but many of them seem to misunderstand the situation as if CoH were the ones designing or providing patterns for the knock-off characters. If someone puts out a “How to Draw the X-Men” book without authorization, then sure, you sue them, but if they sell “How to Draw Super-Heroes” and people can apply those skills to Wolverine, you don’t have a case… and you definitely don’t sue the people who made the pencils and paper!
Follow-up posts: A judge dismissed half the claims in March, and the suit was settled in December.