It's a great question because this is a really gray area. Among the factors that will determine whether you will be able to get away with using "Not Mario" in your game include:
- How dissimilar does your character look from the original? A greater number of clear differences between your character and the original will work in your favor. This is obviously the most important factor at play. In my personal (non-expert) assessment, your Not-Mario is too similar to Mario; the hat, color scheme, and power-up iconography are all dead ringers for real Mario and you can probably get away with using one of these three, at most.
- Is your depiction of the character clearly parody? Depicting the character (or the situation that they appear in) in a humorous light and "hanging lampshades" with this character's dialogue will work in your favor. Having your game treat the character the same way that the original character's work treated the character, however, will work against you. The tone of the depiction is probably the second most important factor at play.
- Does the use of this character stand to increase your sales/profitability? If your game is completely noncommercial, this will work in your favor. If your game is commercial but use of the character is unlikely to increase your sales, this will also work in your favor. For example, if the character plays a small role in your game and is not present in your marketing materials for the game, the original work's copyright holder is less likely to feel that the character helped you garner sales (that they might be entitled to a piece of). This ties in with several other points, especially the next three.
- Could audiences confuse your character for an artistic depiction of the original? If an average fan would say "this character has some striking similarities to X" instead of "this character is X", that will work in your favor. Making Not-Mario's outfit rainbow (and highly textured) instead of a plain red, for instance, or giving him vaguely Chinese features, will make it much less likely that people will confuse Not-Mario for an actual depiction of Mario.
- How big of a role does this character play? A smaller role will work in your favor. A cameo appearance by Not-Mario will probably be considered a cute homage, whereas if Not-Mario is the main character it is somewhat more likely to be considered an illegal copycat work. This ties in very intimately to the potential to increase your profitability.
- Does the gameplay resemble the original? Greater differences in gameplay will work in your favor. If your game is a run-and-jump platformer, it's riskier to use Not-Mario than if your game is a Visual Novel. Part of this is because similar gameplay may make your game a direct competitor of the original, and therefore your use of the character can actually hurt their sales.
- How recognizable and distinct is the original character? Low recognizability and distinctiveness will work in your favor. Getting away with a "Not Me" version of Marble Madness or Excitebike characters, or even that lovable dude from "Buzz!" will probably require far less change than a "Not Me" version of Sonic the Hedgehog, Pikachu, or Viewtiful Joe.
- What is the character's name and background? Dissimilar names/backgrounds from the original will work in your favor. A rocket scientist named "Marty" or "Manny" is much more dissimilar to the original than a plumber named "Maryo". However, if your depiction of the character is clearly a parody (see #2), you tend to get a lot more leeway on this point.
- Are there other characters in your game from the same original work? If this is the only character, it will work in your favor. If there are several other characters from the same work, it will work against you, especially if they appear throughout your game rather than in one place.
- Has this ever been done before? Precedent for similar "Not Me" depictions of the character in other works will work in your favor. Precedent of the copyright holder taking action against "Not Me" depictions of the character will work against you.
- Where do you live (and where are you selling your work)? Different countries and governments have different views of what is fair use, what is copyright infringement, and what is worth going after.
If a majority of these are working in your favor, especially the first four, you are
likely to be allowed to use your characters. If a majority of these are working against you, especially the first four, you should not use your characters.
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Here's an example of a "Not Pac-Man" and "Not Ms. Pac-Man" that I commissioned for my upcoming commercial game. Their names are "Zack Tan" and "Ms. Zack Tan" and they appear for about two minutes as part of a tongue-in-cheek battle tournament in my RPG. I believe that it will be fine for me to use this couple, mostly on the strength of the first four points. Let's go through and see why (
+ indicates that I believe it to work in my favor;
- indicates it could theoretically work against me):
- They have obvious features that clearly distinguish them from the original, including large snouts, arms, and somewhat different eyes. +
- The presentation is not quite a parody but is done in an extremely lighthearted, comedic light where the tournament's host makes a bunch of over-the-top statements and bad puns about them. ++
- The game is commercial, but the characters are only used in a single sequence and I don't plan to show them on any of the game's marketing materials, so it is extremely unlikely that use of my characters will directly lead to increased sales. The more likely result is that gamers will get a good chuckle and a warm feeling out of it. +
- While most fans will recognize the similarity, my characters are different enough (see #1) from any modern depiction of Ms./Pac-Man that it's almost inconceivable that any fan would ever mistake it for a drawing of the original characters. ++
- The characters play relatively small roles, only being present in one scene. +
- The gameplay does not resemble Pac-Man in any way. +
- The original characters are very recognizable, and somewhat distinct (in their modern remake versions). -
- Their names are obvious references to the original, but not close enough to ever confuse the names with the original. No signifcant background is given about them in-game.
- They appear alongside parodies of the Pac-Man ghosts. -
- Parodies and depictions of Pac-Man are seen regularly in newspaper comics, YouTube channels, and occasionally other games. Namco has generally been accepting of these. +
- I live in the USA and am planning to sell the game online, all over the world.