Are you misreading “preparing” as literally any writing

“Prepare derivative works” means not just any writing, but literally anything creative. If you paint a picture of a character from a book, using specific details described in that book such as their appearance and name, you are creating a derivative work.

https://law.stackexchange.com/questions/78442/what-is-considered-a-derivative-work

Even that Wikipedia article goes into fair use.

Fair use carves out an exception for parody, criticism, discussion, and education. “Entertainment” or “because I like the series and these characters” are not one of those reasons. Fan fiction might qualify as parody though.

What effect on the market can there be for a fan remaster of a 20 year old game that isn’t for sale anymore? Hard to argue that doesn’t fall under fair use.

This is not how “the effect of the use upon the potential market for or the value of the copyrighted work” part of fair use works.

A company can create a work, sit on it for literally 100 years doing nothing with it and making not a single cent from it, then sue you for making a nonprofit fan work of it. Steamboat Willie is 95 years old and until just this year you could have been sued for drawing him. Note that, in the eyes of the law, Steamboat Willie is effectively a different character than Mickey Mouse.

Again, I cannot stress enough how it doesn’t matter at all whether you are personally profiting from something or whether you are affecting a market. The word “potential” in that quote above is doing a lot of work:

A father in the UK wanted to put spiderman on the grave stone of his 4 year old son who loved the character. Disney said “no”. Disney does not make tombstones. You are not eating into their profits by putting spiderman on a tombstone. And yet in the eyes of the law Disney has every right to stop you since they might decide to start up a tombstone business next week.

Nothing I have written here is legal advice.

EDIT: I am not a fan of any of this. I think you should be able to write nonprofit fanfiction without worrying that some corporation might sue you. I am on your side on this. But this is the reality we live in.

People are allowed to write fanfic and make fan movies and whatnot. The line isn’t crossed until money changes hands.

This is completely wrong. A company is fully within their rights to issue you a cease and desist for fan works. Some companies, like Disney and Nintendo, do this all the time (though sometimes people are able to fly under the radar).

If you see a free fan game or fan work of anything it’s completely at the mercy of the company that owns the IP. If it’s not taken down it’s either because the company is cool with it, not aware of it, or can’t be bothered to deal with it.

EDIT: https://en.wikipedia.org/wiki/Legal_issues_with_fan_fiction

People really have no idea how overbearing IP laws are. Technically even recordings of people playing video games (let’s plays and the like) could be infringing. This hasn’t been extensively argued in court because most game companies don’t want to deal with the PR backlash that forbidding let’s plays would cause (in addition to the free advertising they get). Though, once upon a time that didn’t stop Nintendo from using YouTube’s copyright system to claim videos of their games.

https://www.ign.com/articles/2013/05/16/nintendo-enforces-copyright-on-youtube-lets-plays

https://www.slaw.ca/2024/02/07/lets-plays-a-copyright-conundrum/

This is a symptom of the absolutely insane way digital payments work.

You give a company your card details and they’re able to charge whatever they want, whenever they want, by default. That’s like paying at a restaurant by handing the waiter your entire wallet and telling them to take out the cost of the meal.

A lot of crazy “supernatural mystery” stuff consists of listing a bunch of things that are more-or-less true, but omitting one or two really important facts in an attempt to make the other details seem odd.