Saturday, April 30, 2011

The Agent from Hell and the Top Six Scams Targeting Writers

Pity the poor writers who chose the Deering Literary Agency of Nicholasville, Kentucky, to represent them. According to The Seattle Times, the founder of the agency, Dorothy Deering, was:
an out-of-work bookkeeper saddled with a felony embezzlement conviction. By 1987, she had written a science-fiction novel and been swindled by three "fee agents" who promised to find her a publisher. Rather than react bitterly, though, she was inspired to start a new career: Taking advantage of aspiring writers just like her. 
Deering persuaded her clients to pay her thousands of dollars to edit, print, publish, and promote their books.  Most ended up, in the words of The Washington Post, with "no book, no life savings, no nothing." 

Thirteen years after she launched her agency, Deering achieved the distinction of becoming the first U.S. literary agent to be convicted of mail fraud.  She was sentenced to 46 months in prison, and she and her confederates were ordered to repay more than $2 million in restitution to the hundreds of authors they had bilked.

Criminal law professor and ex-FBI agent, James Fisher, recounted the tale of Deering's literary grifterism in Ten Percent of Nothing: The Case of the Literary Agent from Hell The title refers to the ten percent royalties that the authors were promised on sales of theirs books. According to The Christian Scientist Monitor, only about six of the 200 books that the Deering Agency contracted to publish ever made it into print.  

But Deering and her accomplices are by no means the only practitioners of this "genteel racket."  Fisher estimated that, in1999, more than 10,000 gullible writers forked over more than $50 million to dishonest literary agents.  The Post called it "one of the dark, ugly secrets of the American publishing industry."

The Top Six Literary Scams

Many writers would give their eye teeth to be published, and there are plenty of scammers ready to take them. Here are six classic literary scams.

Scam 1:  The pay-to-publish companies that (a) charge vastly excessive fees to print your work, (b) produce a shoddy product or no product at all, and/or (c) make misleading claims about their capabilities to market your book, distribute it to bookstores, and have it reviewed. Particularly in these days of do-it-yourself ebooks, the economics and advisability self-publishing are a complex subject.  A very few authors make decent money by publishing their own books, but the vast majority never come close to earning back their investment.  Most authors are probably well-advised to focus their efforts on honing their craft, finding an honorable agent, and moving heaven and earth to place their work with a conventional publisher that reliably pays royalties and (one hopes) an advance.  If you can't find a conventional publisher and crave an audience for your work, the Internet can often provide a community of readers virtually for free.  (But see this earlier post on the implications of Internet publication.) Suffice it to say that if you're planning to pay to have your work published, do a lot of comparison shopping and carefully investigate the track records of companies you are considering. And if you're paying to publish, you should retain all rights (except the strictly limited non-exclusive right to print copies pursuant to your specific authorization).

Scam 2:  Agents Who Charge Up-Front Fees.  The  fees are variously styled as "reading fees," "representation fees," "evaluation fees," "retainers," or "marketing fees."  But whatever they are called, they are a bad deal for writers.  Agents should make their money by selling your work, not by charging you to read your work. Indeed, the Code of Ethics of the Association of Authors Representatives ("AAR") expressly states that "literary agents should not charge clients and potential clients for reading and evaluating literary works in the ordinary course of business."  Here is a list of AAR member agents.  And here is an older Neil Gaiman post on literary agents.

Scam 3.  "Book Doctors" Who Are Quacks.  Using ghost writers, book doctors, and freelance editors is, of course, a longstanding tradition in publishing.  (See this quite wonderful profile of Sarah Palin's ghost.)  There is nothing wrong with it, provided your doctor is talented, reliable, reasonably priced, and willing to enter into a written agreement specifying exactly what she will do, when she will do it, how much she will be paid, how the relationship can be terminated if it doesn't work out, and that she has no rights whatsoever in the finished work.  See this earlier post on the importance of collaboration agreements.  Regrettably, many writers saddle themselves with expensive quacks who are unable to produce a work worthy of publication and, worse still, place a cloud over the ownership rights in the manuscript. 

The genius of the Deering Literary Agency was that it managed to combine the perverse elements of items 1 through 3 above.

Scam 4. (Some But Not All) Pay-To-Play Writing Contests.  There are all too many writing contests where the sponsor is simply trying to make a profit on entry fees; there is no honor, no glory in winning (assuming that a winner is even selected).  Here again the line is not entirely bright.  Some quite respectable contests and awards do require modest entry fees.  But you should be very leery of paying to enter a contest that you've never heard of.  And be especially skeptical of contests that require you to assign to the contest operator any publishing rights in your work (much less exclusive publishing rights), particularly if your work is not even the winner.  The Science Fiction & Fantasy Writers of America ("SFWA") offers some good guidelines for assessing contests here.  And here is a post from on spotting a bad poetry contest.

Scam 5.  Pay-To-Publish Anthologies.  These are similar to profit-making contests.  You submit a poem or short story; you are notified that your work has been selected for inclusion; and you pressured to buy several copies of the (expensive) book in which your piece is presumably going to appear.  The anthology, if it is published at all, crams in hundreds of poems or stories of no consistent distinction.  Here's what the SFWA says about what are, in effect, vanity anthologies.

Scam 6:  The Classic Deadbeat.  But the ultimate scourge of freelancers is the person or company that hires you to write and never pays (or cynically bargains you down to a sum far lower than was originally promised).  There is no way to completely protect yourself against the deadbeat other than demanding full payment up-front -- an arrangement to which few writing clients will ever agree.  Beyond that, key defensive strategies are to get your financial agreement in writing, try to arrange for interim installment payments and kill fees, and provide in your agreement that rights in your work not transferred unless and until you are paid in full.  The American Society of Journalists and Authors "Getting Paid" webpage offers good advice on strategies for dealing with late payers and non-payers.

"Writer Beware"

The SFWA and Mystery Writers of America maintain the excellent Writer Beware webpages (some of which I've linked to above) that promise to "shine a light into the dark corners of the shadow-world of literary scams, schemes, and pitfalls."  Writer Beware offers detailed discussions of unethical agency practices, fly-by-night publishers, contest scams, vanity press abuses, rip-off services for writers, and Twenty-First Century swindles such as overpriced ebook self-publishing and print-on-demand services. The site includes lists of "two thumbs down" agents and publishers.  And there is a Writers Beware Blog that "provides up-to-the-minute information on specific scams and schemes."  The information is accessible to all -- not just to SFWA members.

"Contract Watch"

The American Society of Journalists and Authors offers an excellent "Contract Watch" feature on its website that focuses on scammy (or otherwise unfair) provisions in book, periodical, and online publishing agreements. 

"The Street Smart Writer"

Writer Jenna Glatzer and Maryland-based lawyer Daniel Steven co-authored a feisty book entitled The Street Smart Writer: Self Defense Against Sharks and Scams in the Writing World Glatzer and Steven cover in detail many of the subjects briefly touched on in this post: pay-to-publish vanity press deals; deceptive writing contests; pay-to-read agents. They also have chapters on  "After Publication Rip-Offs for Book Authors," "Special Screw-Overs for Screenwriters," "Dealing with Deadbeats," and "What To Do If You've Been Screwed."  This is not a book for the likes of Jonathan Franzen and Jennifer Egan, who already have access to great agents and lawyers.  But if you're a novelist or poet struggling to break into print or or scrappy non-fiction freelancer continually searching for paying markets for your work, this is a practical self-defense guide with a surprisingly upbeat tone.  Well worth a couple of hours of your time.

Other Anti-Scam Resources on the Web

A few years back, Chicago-based thriller writer Joe Konrath wrote this blog entry on writing scams; it remains one of the better short summaries of the subject, and it has attracted scads of interesting comments from readers. His basic message: "don't pay anyone any money for anything"; but, "if you do, do so knowing the risks involved."  Literary agent Barbara Doyen has also posted a series of articles on scams targeting writers.

Jim Fisher, who chronicled the exploits of the Deering Literary Agency in Ten Percent of Nothing maintains a website with a section on publishing scams.  His "20 Tips on How To Assess a Literary Agent" contains especially pragmatic advice.  Here, by the way, is a Bookslut interview with Fisher.

The amusingly named Preditors & Editors site identifies publishers, contests, and agents that have been the subject of writers' complaints.  Of course, writers who complain are not always in the right; there may be another side to some of the stories.  But it is certainly worth checking online evaluation sites for comments when you are dealing with a new and unfamiliar outlet for your work.

Tuesday, April 19, 2011

No Competing Works: The Third Nastiest Clause in Book Publishing Agreements

Do you remember Harry Lorayne? If you ever met him, odds are he would remember you.  Lorayne is a memory-training specialist and performer who authored How To Develop a Super Power Memory.  He is also the poster child for the perils of the "no competing works" clause in publishing contracts.

In 1956, Lorayne signed a contract with publisher Frederick Fell for Super Power Memory, which contained a clause that prohibited Lorayne from "participating in the publication of any similar work which would tend to interfere with or injure sales of the book under contract."  Eighteen years later, when Super Power Memory was still in print, Lorayne wrote another book on memory (together with, improbably enough, basketball star Jerry Lucas) entitled The Memory Book, which was published with great success by Stein & Day.  Fell sued -- archly accusing Lorayne of "an apparent moment of forgetfulness" in disregarding the "no competing works" clause.  

A preliminary decision in the Lorayne case is reported here (but it doesn't really tell you much about the contractual issues).  I do not know how the Lorayne case was ultimately resolved; I do know that The Memory Book continued to be sold without interruption.  But, to me, the fundamental question in the case has always been: what in the world would Harry Lorayne ever write about except memory training?  If a court were to enforce a broad "no competing works" clause against him, it would essentially be saying that Lorayne could never write another book as long as Super Power Memory was available in any edition.

Specialists Beware

Like Harry Lorayne, many academicians and textbook writers spend their entire professional lives researching and writing about the same general subject matter.  Take, for example, a professor who authors a textbook on mycology or evolutionary psychology early in her career.  Strictly construed, a "no competing works" clause might mandate that she forever remain a one-book author.  Fortunately, as with covenants not to compete, the courts tend to construe such clauses narrowly, seeking to limit them in time, subject matter, or geographical scope so as not to interfere with an expert's ability to practice her profession and earn a living.

Consider the case of the late Justin Wilson, who was the author of Louisiana Outdoor Cookin'.   When Wilson later tried to publish a book with another publisher entitled Homegrown Louisiana Cookin', his first publisher sued, arguing that the "no competing works" clause barred such a sequel.  Surely, if you are a Cajun chef, living and working in Louisiana, it is unsurprising that you might aspire to write more than one book on Louisiana cookin'.  And a Louisiana court, ruled that Wilson had the right to do so, despite the contractual prohibition.  The judge's decision noted that "non-competition clauses are not favored in the law and are strictly construed against the person attempting to limit the competition."  Because the clause was not limited to a specific time period or restricted area, the non-compete was held to be "too vague and broad to be enforceable."

The essential legal treatise Perle & Williams on Publishing Law mentions another case in California is which the author went on the warpath and sued his publisher, arguing that the "no competing works" clause was an unreasonable restraint on trade in violation of the antitrust laws. (Perle and Williams don't report the outcome; if you happen to know, please send me an email.)

A Typical Clause

To be fair, a publisher is entitled to be protected against the author simply repackaging his book and publishing it a second time with another publisher. But many "no competing works" clauses go farther than they need to, as in this fairly typical example
During the term of this agreement the Author shall not, without prior written consent of the Publisher, participate in the publication of or be otherwise connnected with any work that might, in the Publisher's opinion, directly or indirectly interfere with or diminish the sale of the Work.
This provision is particularly aggressive because (1) it restricts for an indefinite period of time any "participation" in a conflicting work, even as a co-author or contributor; (2) it introduces the vague notion of "indirect" interference with the sale of a work; (3) it is not limited in the types of competing works (e.g., book-length) that it prohibits; and (4) the test of whether book two "interferes" with the sales of book one is subjective, turning entirely on the "opinion" of the publisher.

In contracts with academic writers, it is fairly common for publishers to include an additional clause along these lines:
The Author may, however, draw on and refer to material contained in the Work in preparing articles for publication in scholarly and professional journals and papers for delivery at professional meetings, provided that credit is given to the Work and the Publisher.
Helpful, but it really doesn't give you any protection when it comes to your next full-length work.

A Better Alternative

With works of non-fiction in particular, publishers will often refuse to eliminate the "no competing works" clause entirely.  However, when possible, you should at least try to negotiate a more even-handed clause. The Writer's Legal Guide recommends that the contract describe the type of successor work you are prohibited from writing
as specifically as possible as to subject matter, market, and format. Do not give the publisher the discretion to decide whether a work will compete with the contracted book -- limit the restriction to works that will actually compete with the primary work.
For example, if you are writing a textbook, you might try to limit the non-compete to another textbook on the identical subject directed to a similar academic level (e.g., high school biology students), clearly reserving the right to publish scholarly monographs or works for a general audience on the same subject.  You could also seek to make clear that a competing "work" must be book-length, and that the clause therefore has no application to articles, etc.  A somewhat better clause might look like this:
For a period of four years, Author shall not publish any book-length work on the same subject as the Work, namely [inserting here a detailed description of the "subject"], directed to the same audience, that will diminish sales of the Work.
And, if you have an idea for a subsequent work on a related subject, you can attempt to expressly carve out that work from the scope of the "no competing works" clause, e.g.:
Publisher agrees that Author may continue to write and publish books and other works dealing with mycology and may expand chapters from the Work to new full-length works.  For the avoidance of doubt, this clause is not intended to prohibit Author's publication of such works.
Of course, whether you can obtain changes of this kind will depend upon your bargaining power.  If you have an agent, she can be a godsend, advising you what's realistic and achievable under your particular circumstances.  For many authors, the language of the "no competing works" clause may not be a deal breaker, but for some specialists it ought to be.

The "No-Competing Works" Clause and Works of Fiction

The "no competing works" clause is primarily a concern in contracts for works of non-fiction. Ordinarily two novels by the same author, published by two different publishers, will not interfere with each other's sales. Neverthless, in rare instances, publishers have taken the dubious position that the "no competing works" clause prohibits re-use of the characters from a novel in a sequel. The "no competing works" clause has little genuine commercial application to fiction, and it is not unreasonable to ask that it be stricken entirely from a contract for a novel or a book of short stories.  At the very least, the publisher should be willing to clarify that the clause does not prohibit you from publishing sequels or re-purposing characters in other works.

What If Your Contract Does Not Contain a "No Competing Works" Clause?

If you do not have a "no competing works" clause in your publishing contract, then you are ordinarily free to write a book on the same topic for another publisher. That's the lesson of Wolf v. Illustrated World Encyclopedia.  But watch out for the "option clause," which may require you to offer your next book to your old publisher.  And remember that, if you granted exclusive publishing rights to Publisher X, it became an owner of a "copyright interest" in the work.  As a result, Publisher X could sue you and your new publisher for copyright infringement, if you cannibalize a meaningful amount of text from the book you published with Publisher X.  Yes, you can be sued for infringing a copyright in a work that you yourself created; do-it-yourself infringement was alleged in the case involving John Fogerty of Creedence Clearwater fame and (more or less) in the arbitration involving The Hunt for Red October, described in this earlier post.

Can Your Publisher Issue Another Work that Competes with Yours?

What about the flip side?  Can a book publisher publish two or more books on the same subject by different authors?  The answer is:  ordinarily yes.  For example, Harry Lorayne's publisher could probably publish two or even twenty books on memory without breaching its duties to Lorayne, unless, as described in Van Valkenburgh v. Hayden Publishing, the publisher promised to use its best efforts to promote one author's book and allegedly did not act in good faith in publishing books by other authors on the same topic.  Suffice it to say that publishers will seldom sign a "best efforts" clause.

More Resources

I suggested that the "no competing works" clause may be the third "nastiest" clauses in a book publishing agreement.  What are number one and number two?  Depending upon the phrasing, of course, they are often the option clause and the grant of rights clause.  More about these extremely important terms in later posts.

Friday, April 8, 2011

Copyright in Fictional Characters: Can I Have Don Draper Make a Cameo Appearance in My Novel?

I'm throwing a dinner party in my novel. My guest list includes Don Draper, James Bond, Jack Ryan, Scarlett O'Hara, Dolores Haze a/k/a Lolita, and Elizabeth Bennett.  I don't expect my guests to say or do anything at my fictional party.  The question is:  Can they simply show up at the dinner table without my infringing the copyrights of Matthew Weiner, Ian Fleming, Tom Clancy, Margaret Mitchell, Vladimir Nabokov, and Jane Austen or their heirs?

Before trying to answer that (somewhat surprisingly complicated) question, let me introduce you to one of my guests.  Jack Ryan is known to millions of readers as a tough former Second Lieutenant in the Marines, a onetime CIA agent, and ultimately President of the United States. He appeared as a character in Tom Clancy's first novel, The Hunt for Red October, which was published in hardcover in October 1984 by the U.S. Naval Institute Press, a small publisher that was then primarily issuing works on naval history.  Ryan later reappeared in many other Clancy novels.  But did you know that Jack Ryan was the subject of allegedly infringing use by none other than . . . Tom Clancy?

Clancy was a true unknown when he wrote Hunt for Red October -- an insurance agent who daydreamed of becoming a novelist.  The New York Times tells the back story here.  Prior to Red October, Clancy had published no fiction, but he had published a non-fiction article on the MX missile in the Naval Institute's Proceedings magazine.  So when he completed Red October he offered the novel to the Naval Institute; its headquarters were, after all, just a few miles away from his home near Annapolis.

The Naval Institute had published a few previous novels on naval themes and offered Clancy its standard contract, which included an assignment of the copyright to the publisher -- not uncommon for academic books at the time, but rare for novels.  Clancy happily signed the agreement and received a $5,000 advance.  Red October surprised both author and publisher when it turned out to be a colossal bestseller, selling many millions of copies (after Ronald Reagan praised it as "the perfect yarn").

For his second book, Clancy jumped ship and signed with a big New York publisher.  But the earlier copyright assignment to the Naval Institute almost torpedoed the new book.  Why?  Because the copyright assignment arguably carried with it the rights to the characters in Red October.  The Naval Institute commenced an arbitration claiming that, as the Times explained, the Naval Institute's copyright ownership in Red October gave it "a continuing interest in the Jack Ryan character, and it should therefore receive a percentage of the profits from Patriot Games and The Cardinal of the Kremlin and from any films or miniseries made of them."

The Red October arbitration was settled on undisclosed terms.  But the point is that fully drawn literary characters are generally subject to copyright protection, and the copyright owner will often be able to prevent others from using the character in other works without permission.  But the legal principles are by no means simple.

There are two separate but related questions here.  First:  Is a particular character protected by copyright?  Second:  Is the particular use made by someone other than the copyright owner infringing?

Here is what famed judge Learned Hand said 80 years ago in Nichols v. Universal Pictures Corp. about distinguishing between literary characters that are and are not protected by copyright:
If Twelfth Night were copyrighted, it is quite possible that a second comer might so closely imitate Sir Toby Belch or Malvolio as to infringe, but it would not be enough that for one of his characters he cast a riotous knight who kept wassail to the discomfort of the household, or a vain and foppish steward who became amorous of his mistress. These would be no more than Shakespeare’s ‘ideas’ in the play, as little capable of monopoly as Einstein’s Doctrine of Relativity, or Darwin’s theory of the Origin of Species. It follows that the less developed the characters, the less they can be copyrighted; that is the penalty an author must bear for marking them too indistinctly.
Judge Hand's analysis still holds true today.  As copyright guru Paul Goldstein puts it:
Fully realized characters in literature are little different from fully defined personalities in daily life, and it is no surprise that the test of protectibility that courts apply to literary characters is closely akin to the criterion that individuals apply in daily life to determine whether they in truth know someone. A literary character can be said to have a distinctive personality, and thus to be protectible, when it has been delineated to the point at which its behavior is relatively predictable so that, when placed in a new plot situation, it will react in ways that are at once distinctive and unsurprising.
Every reader of Catcher in the Rye comes away with the feeling that she knows Holden Caulfield, and so it was unsurprising to many copyright lawyers when, a little over a year ago, a court enjoined publication an unauthorized sequel by Fredrick Colting that told the story of a 76-year-old Holden Caulfield.  Here is the appeals court decision in that procedurally complicated case, which ended in a settlement prohibiting further publication in the United States and Canada.  Holden Caulfield is, in Goldstein's phrase, "fully delineated," and like other fully delineated characters (e.g., James Bond, as the court ruled in this lawsuit) he is surely protected by copyright, while, by contrast, sketchily defined, stock characters may not be (as the court found in this case).  (See also this account of a 1998 lawsuit to block publication of Lo's Diary "a distaff version of Nabokov's Lolita.")

But the fact that a character is copyright protected does not necessarily mean that every use of his/her fictional persona is an infringement.  A second work that invokes a copyright-protected character must copy some significant amount of expression in order to be an infringement.  The mere mention of the name of a copyrighted character ought not to be a copyright infringement because names, standing alone, are not copyrightable. (But see the discussion of trademark and unfair competition law below.)  A copyright infringement occurs only when a quantum of protectible expression has been copied, and the copying is not excused by the doctrine of fair use.  (Note that this post deals primarily with openly acknowledged use of another writer's character, not the situation where an author merely borrows certain traits or characteristics from a character.)

With this principle in mind, it would seem to follow that a fleeting appearance of another writer's fictional character as a dinner guest in my novel should not qualify as a copyright infringement.  However, as soon as I start to make Jack Ryan or Don Draper talk like, act like, or look like Jack Ryan or Don Draper in my novel I may be treading on thinner ice.  And if I make Jack Ryan or Don Draper an important character in my book, I'm begging for trouble.

There are several other important considerations here.  First, there are some copyright owners who, regardless of viability of their claims, will not hesitate to sue me at the drop of a hat if I use their characters in any way without obtaining permission (which they will never give me).  There is, in other words, a practical risk in inviting other writers' characters to my fictional dinner party, even if those characters keep their mouths shut and do nothing.  Frankly, it may not be worth it to me to take any risk of provoking a lawsuit arising from my imaginary soiree, even if I have the better part of the argument on copyright.  It's always safer to invite some nameless characters of my own creation.

(And Elizabeth Bennett can still attend the dinner, since she has been in the public domain for a long, long time.  Seth Grahame Smith, author of Pride and Prejudice and Zombies, is surely thankful for that.)

Second, the owner of the rights in a famous fictional character will also likely seek to invoke other legal theories -- particularly trademark and unfair competition laws -- when trying to protect her characters from my unauthorized use.  If the name of a character has acquired secondary meaning -- i.e., if the name is sufficiently well known that readers associate it exclusively with a particular author's work -- then the owner may be able to claim that my unauthorized use of the name creates confusion among readers, who may mistakenly conclude that my use of the name is authorized, approved, or licensed by the owner.  Confusion as to source, authorization, or  endorsement is the essence of an unfair competition claim. There might be ways to get around the trademark infringement/unfair competition argument, particularly with the use of prominent disclaimers that make very clear that Matthew Weiner has not authorized me to mention Don Draper.  But, still, the unfair competition argument is a complicating factor when referencing the characters of others.

Concern about characters as trademarks may -- or may not -- have figured into some of the choices made in The Wind Done Gone, by Alice Randall.  Randall's novel was, of course, a reinterpretation of the characters and events in Gone with the Wind.  Scarlet O'Hara appears in the novel, but she is referred to only as "Other."  And Rhett Butler is called "R."  Place names, such as Tara, were also altered.  That said, Scarlett and Rhett are "fully delineated" characters whose fictional lives are continually referenced (albeit not by their full names) in Randall's novel.  Small wonder then that the owner of the copyright in GWTW sued Randall's publisher, Houghton Mifflin.  As you can see from the complaint, the plaintiff alleged both copyright infringement and unfair competition, claiming, among other things, that the characters were both copyright-protected and had acquired secondary meaning.  It was a hard-fought case, with an inconclusive ending.  The trial court found that The Wind Done Gone was likely a violation of copyright and issued a preliminary injunction.  But the appeals court, in this decision, found on First Amendment grounds that it was improper to preliminarily enjoin publication of TWDG in part because Randall's work could qualify as a "parody" of GWTW.  But the appeals court did not rule out the possibility that the publisher of TWDG could ultimately be liable to the copyright owner for money damages.  The case settled before there was any final decision on a host of interesting legal issues.

These days, the unauthorized use of characters occurs all of the time in the context of fan fiction, which typically involves inventing new stories using familiar characters from literature, comic books, movies, or television programs.  An entire subculture has built up around fan fiction, and recently FanFiction.Net was the 747th most trafficked website in the United States.  Although each work must be judged on its own, suffice it to say that, if the issue ever reached a court, many works of fan fiction would be deemed derivative works that infringe upon the characters and stories on which they are based.  Chilling Effects has a great Q&A on the legal issues relating to fan fiction.  And the Wikipeida entry on the legality of fan fiction also makes for interesting reading.  Georgetown Law School professor Rebecca Tushnet wrote an excellent law review article on the subject.  And here is a list of other law review pieces discussing the legal issues.

Fan fiction writers have two things going for them.  First, as discussed in some of the references above, many (but by no means all) copyright owners have turned a blind eye to infringing fan fiction, on the theory that they do not want to alienate some of their most enthusiastic followers. Second, fan fiction writers rarely seek to profit from their work, which is helpful in arguing the defense of fair use, but by no means provides immunity from an infringement claim.  In short, writers of fan fiction, who publish their work on the web or elsewhere, should be aware that they are taking some degree of legal risk, unless, like Pride and Prejudice and Vampires, their works are based upon public domain sources.

So can I have Don Draper make a cameo appearance in my novel?  As you can see, the answer is a thoroughly equivocal "it depends."  A writer contemplating using the characters of another writer would well-advised to seek out the counsel of an experienced intellectual property lawyer.  (See this prior post on free and low-cost resources.)  If you're publishing with an established house, you should discuss your particular use of other writers' characters with your editor and the in-house attorney.

There are several helpful discussions on the web concerning copyright in fictional characters, including this one by Denver lawyer Lloyd Richthis one by California lawyer Ivan Hoffman, and this by Phoenix lawyer Jasmina Zecevic Richter.