Featuring fictional entities in your work
<p><em>This question has been heavily reworked to be more concise and to have a smaller scope.</em></p>
<p>Okay, I'll start off with an assumption. It is not allowed, under any circumstances, to feature a fictional element not under one's (temporary) copyright in one's work, <strong>as am in-universe non-fictional element</strong>. If my story involves Superman showing up, and he isn't referred to as an in-universe fictive character in any way, then that is illegal.</p>
<p>[From here on out, <em>fictional</em> means <em>in-universe fictional</em>, and <em>non-fictional</em> means <em>in-universe non-fictional</em>]</p>
<p>However, if e.g. Superman is treated as a fictional entity, I assume it can be legal in some cases. It is done all the time. The most traditional example of this is characters referencing these fictional elements, as fictional elements.</p>
<p>Though, less traditional examples can be thought of. Imagine a story involving a portal into fictive worlds; those worlds are, by the very world-building of the story, fictive within the story. But, despite being labelled as fictive, those worlds are given a realness within the story by their very capacity to be entered. Similarly, let's say I have a story with a spell/machine that can literally draw fictive elements into reality. Well, they are again labelled as fictive, but they are also made real within the universe of the story.</p>
<p>If the above is legal, then I could theoretically make a whole book about Superman, set in a world where Superman is a fictional character that has been given a non-fictional form. Whether or not Superman remains <em>fictional</em> at the time of the plot within the universe, is a tricky semantic and philosophical question. If one says that he doesn't remain fictional after being given this non-fictional form, then consider stories with people dressing up as fictional characters and enacting their personas. Aren't these people embodying a <em>non-fictional form</em> of the fictional character? And if so, would that too be illegal? Where does one draw the line? Given the possibilities that the sci-fi and fantasy genres offer, that line needs to be razor sharp.</p>

<p>It depends.  Generally referencing a previous work of fiction in a brief acknowledgement is that the film or book is a work of fiction in your own universe.  There maybe a visual gag about it, but it's not always referenced.  For example, in Avengers: Endgame, there is a scene where, in describing how their time travel works, the Avengers list a bunch of time travel films (and Die Hard) to demonstrate that &quot;changing the past does not change the future&quot; logic of the MCU.</p>
<p>In &quot;Last Action Hero&quot; the plot revolves around an Arnold Schwarzenegger fan getting sucked into a film that stars Arnie as a cop named Jack Slater.  At one point, the kid tries to convince Jack Slater that he's a fictional character played by an actor and gets the idea to take Jack to a Blockbuster to show him Terminator films.   In the film within a film, Terminator does exist... but it stars Sylvester Stallone (the gag referencing the playful rivalry Arnie and Stallone have) and this fails to convince Slater that he's fictional.</p>
<p>Other films might use fictional works, but from the library of their parent company.  A film about a DC hero, looking to make a kid who is a bit of a nerd, might make that character obsessed with Harry Potter, since both media have film rights owned by Warner Brothers (Marvel in the same scenario, will make their nerd kid a Star Wars fan... Disney owns both franchises).</p>
<p>Other films might be put out with characters or media products under a shared license by the rights holders and will properly credit the rightful ownership.  For example, the Looney Toons showed up in &quot;Who Framed Rodger Rabbit&quot; under contract between Disney and Warner Brothers (WB included a provision that no major Disney character could exceed screen time of a Looney Toon.  That's why Donald and Daffy have dueling piano scenes and Bugs and Mickey are skydiving buddies.  Even Porky and Tinkerbell share equal time in closing out the films with their signature film closing (&quot;That's All Folks&quot; for Porky, Tinkerbell proofing the Iris Out away with her Wand.).</p>
<p>In the spiritual successor of &quot;Chip and Dale, Rescue Rangers&quot; the plot facilitated the lack of deals limiting the availablility by the whole plot revolving around well known characters being &quot;bootlegged&quot; into knockoff films (a well known phenomena) that still didn't stop some unusual &quot;non-Disney&quot; characters from appearing (G1 Transformer &quot;Blaster&quot; was a high school classmate of Chip and Dale and the character who sat next to Dale at the comic-con was an exercise in just how blatant they could get with rip offs.).  Other characters were referenced but only by showing signature body parts or portions of character designs in cameos... Jimmy Neutron's Hair and Fred Flinstone's shirt being the two best examples I can recall.</p>

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