From FAA Wiki
There are severe differences in the legalities and copyright protection between fan art and regular art. When drawing Lion King fan art, the artist must realize that the Walt Disney Company holds all intellectual property rights to the characters and story of The Lion King, which creates a very complex system of copyright boundaries. As artists, we must realize that we are creating art that belong to a universe that we don't own. Hopefully the following document can clear up some of the issues surrounding copyrights.
Legalities of Fan Art
For the most part it is legal to create fan art of established commercial trademarked characters. This does not mean, however, that you have the same protection as an artist who has created an original piece of art would have.
Protecting your Copyright
Unfortunately, it has become quite common practice for fans of The Lion King to use the work of Lion King fan artists. No matter what method of protection you use, if your art is viewable in a browser, it is subject to being stolen. The term "copyright" means the exclusive right to make copies, license, and otherwise exploit a literary, musical, or artistic work, whether printed, audio, video, etc. This means that it is legal, for the most part, to add "© 2008 Your Name" to your artwork. This does not mean, however, that this will hold other fans back from simply copy and pasting your work elsewhere.
Common methods of Protection
- No Internet Exposure. The perfect way to protect your art. The only drawback is: what art? No one will get to see the art you have drawn.
- Copyright Notices. A very simple way to protect your art, most people simply put a copyright line such as "© 2008 Artist Name". Unauthorized redistribution is prohibited." in a corner of their work. This is an accurate way to protect the art without interfering with it, and it tells everyone that Mr. or Mrs. Artist Name is the legal copyright holder and has the right to prosecute people that copy the artwork. That doesn't seem to stop art thieves, however, and its easy enough to crop out the copyright notice.
- Watermarks. Another common method of protecting artwork is by introducing a watermark to it. A "watermark" is a semi-transparent logo or text that an artist puts over the entire piece of artwork or a part of it in order to protect it from being copied. The logo or text can be your name, copyright notice, website address or something similar. The idea behind it is that the art thief wouldn't be able to edit out the watermark, and any attempt to copy it would only be like free advertising for the artist. The major drawback is, however, that a watermarked artwork turns out to be ugly and fans of the artist can't quite enjoy the artwork for its full potential.
- Low Resolution. A decent way of protecting art is by uploading small images like 200x200 pixels. The idea behind low resolution is that art thieves cannot make full size prints of the artwork because the resolution is so small.
- No Protection. The last way is to simply not worry about it and accept the fact that posting art over the internet is the same as giving up the control you have over it. There are no logging programs that log when people copy images from websites. There would be no way to control where the copies go. Once its on the internet, its safe to say that there will be a copy of it on some computer somewhere out there.
Fan Art of Previously Copyrighted Characters has No Protection
Any fan art that contains a character copyrighted by The Walt Disney Company cannot be protected by the artist of that art. Remember that without Disney's permission, every single type of work based upon their copyrighted material is illegal. Most entertainment companies overlook these minor copyright violations because they realize that we are, in fact, a fan community and not a competing company using their material to obtain profits. They also realize that not many people make money off of fan-based creations such as fan art or fan fictions. If fans did manage to make money off these creations, Disney would surely pursue copyright infringers with more effort. So since you have created an artwork with a character copyrighted by someone else, you have no rights over it.