Welcome to Suing Is Magic: A series where I address common misconceptions about legal issues. These will mostly be focused around "intellectual property", or what I usually call copyright, trademark, patent, and trade secret law. These articles do not constititue legal advice and may themselves contain misconceptions or simplifications of the underlying laws being discussed. Except where otherwise specified, I am discussing the law from an American perspective. IANAL (I Am Not A Lawyer) - most of this is hastily researched crap from Wikipedia.
Whenever a fan project is shut down by the company that actually owns the work, a lot of stupid misconceptions seem to start to float around regarding "intellectual property" law. I typically avoid this word if at all possible because it's a confusing term which tries to lump several laws together. The problem with confusing several laws together is that it results in stupid statements like "They have to protect their IP or they'll lose it, that's why they just took down 200 fan projects". Ignore the fact that out of the four things most commonly cited as "intellectual property", only trademarks and trade secrets (not relevant to 99% of fan project litigation) can be lost through inaction.
Slightly less stupid statements would replace "IP" (what the hell do you mean by "IP"? Internet Protocol address?) with "trademarks", but that doesn't make them more correct. Trademarks can be lost through inaction but merely not suing does not provide a basis for trademark abandonment. Nor does a fan project with a trademark as part of their name provide a basis for trademark genericification.
We'll address abandonment of trademarks first. Trademark rights exist to recognize the marks used by businesses during the course of trade for the purpose of protecting consumers. For example, if I publish games under the mark "Fantranslation.org Games" that could potentially be recognized as a common-law or unregistered trademark. The mark which indicates this is the ™ symbol. Likewise, a trademark can also exist in registered form, in that a trademark filing has been approved by the Patent and Trademark Office. The mark which indicates this is the ® symbol. Some trademarks may even be a combination of registered and unregistered elements, which would both be protected. For example, going back to my feeble attempts at game development, the mark I gave earlier might have the symbols added as "Fantranslation.org® Games™", depending on what parts of the trademark passed registration.
In order for an unregistered trademark to be considered abandoned you have to stop using it. For a registered trademark, in order to get a trademark registration removed, you would have to file paperwork that the trademark had been abandoned on the grounds of non-use. Trademark registrations can also be protected by enforcing the trademark in the event of infringement, which is where this whole myth comes from. However, it's not a simple matter of "if this fan project uses the trademark, and this company doesn't immediately sue them as per the Sue The Crap Out Of Fan Projects Act of 199X, they lose the trademark forever!" You would have to challenge the trademark registration and show that the registrant had notified you that they disapproved of the action and then failed to commit legal action in a reasonable period of time.
Even then, they would still maintain common-law trademark rights, they would just lose the registration. It would make it harder for them to sue, but not by much. After all, they still have copyright ownership over the franchise and still are using it's trademarks.
To recap: Not suing over a trademark does not constitute abandonment of the trademark.
There's another confusingly similar form of trademark loss called generification. This is why, for example, the LEGO Group would really prefer if you stopped calling them "legos", especially if they're actually Mega Blocks. To the point where, at one point (although not now) going to "legos.com" would give you a giant error message complaining about your blatant abuse of trademarks. Generification is a different form of trademark abandonment which argues not that the trademark was unprotected or even unused, but that people don't use the trademark to refer to your company in particular. Here's some examples of genericized trademarks: Heroin. Kerosene. Escalator. Aspirin. These were at one point trademarks, but then they stopped because people used them to refer to competing products without trademark term. For example, imagine a world where I started googling the Internet with Bing before tweeting on Facebook about how my cousin is starting to play with "Bratz" barbie dolls.
Again, these have nothing to do with a simple fan project using a trademarked name in the name of their project. You have to have additional steps for it to be genericized, the fan project would have to involve the actual product (and not just a spinoff), and get verbally confused to the point where people freely use the trademark to refer to both authorized and unauthorized goods.
However, let's examine the myth further: The idea is that some large, unfeeling corporate entity that fans have grown emotional ties to, and is now shutting down beloved fan projects, is somehow obligated to do so. This is a mental fiction put in to place to avoid the cognitive dissonance of being a fan of a fan-hating company. It's not a very good one, because even if it was true, and the company didn't want to take down perfectly fun fan projects, there is a way out of the myth: actually approving the use of the trademarks under a licensing agreement which only allows for noncommercial uses that the company approves of. It's possible.
Of course, outside of the myth this actually can damage your trademark more than leaving it alone. In the US in particular (as opposed to other trademark jurisdictions) all authorized uses of a trademark must carry the goodwill of the business behind it. This is why, for example, a trademark transfer cannot occur without the transfer of other business related property (including "intellectual property"). Likewise, trademark licensing must carry quality control strings attached to it. An entity which licenses a trademark must include provisions in the license for quality control, as there is a risk of a trademark being considered abandoned if the goodwill is destroyed. Even then this bar is fairly low; and you'd have to find a repeated pattern of trademark owners deliberately ignoring low-quality licensed goods before you could begin to claim abandonment.
That's the recurring theme here: pattern. All of these various trademark issues don't come into play until a trademark owner is establishing a pattern of inaction regarding issues that they have demonstrated knowledge over. The bar for what constitutes a pattern, inaction, and knowledge, is pretty damn high.
So please, next time, when someone says "Oh, <COMPANY I ASSIGN EMOTIONS TO> has to be dicks to fan projects or they lose their trademarks", please, educate them.