The movie "The Happytime Murders" uses "Sesame Street" puppets in a way that is "explicit, profane, drug-using, misogynistic, violent, copulating, and even ejaculating."

The Daily Beast reports on the lawsuit brought by the "Sesame Street" company to stop the distribution of the film, which, of course, it did not license or authorize in any way. The film is directed by "one of Jim Henson's family member."

“Sesame seeks an injunction that forces Defendants to cease and desist their trading upon the goodwill associated with Sesame Street in furtherance of box office receipts,” the lawsuit says. “The promotion of The Happytime Murders should succeed or fail on its own merits, not on a cynical, unlawful attempt to deceive and confuse the public into associating it with the most celebrated children’s program in history.”

I assume "deceive and confuse" relates to trademark law. Is it deceptive and confusing or will pretty much everyone know it's a send-up, a satire or parody? When do the rights to characters you've created give way to the right of expression of those who want to make fun of them?

[ADDED: I’m now thinking the headline to this post misstates the facts. I think there’s just a Muppet character that is not a “Sesame Street” character and the poster slogan “No Sesame. All Street.”]

[MORE: I put up a new post with the "restricted" trailer for the movie that makes the overlap with "Sesame Street" very clear. Having seen that — not saying I liked it, but having seen it — I think it's easily within the zone of satire that should be protected.]

This makes me think of "Superstar: The Karen Carpenter Story" — "a 1987 American short biographical film portraying the last 17 years of singer Karen Carpenter's life. Directed by Todd Haynes, the film uses Barbie dolls as actors, as well as documentary and artistic footage... [and] an unauthorized soundtrack consisting mostly of the hit songs of The Carpenters."

"Superstar" was never distributed because it was stopped by claims of copyright in the music. But what about the use of Barbie dolls?

... Haynes detailed Karen's worsening anorexia by subtly whittling away at the face and arms of the "Karen" Barbie doll.

This is only tangentially related, from Woodward and Armstrong's "The Brethren," an account of the Supreme Court in the early 70s:

The National Lampoon, a humor magazine, had just released its February issue. The centerfold was entitled “Amicae Curiae”—Friends of the Court—and it depicted, in a color cartoon, all nine of the Justices engaged in a variety of sexual activity. 

View image here...

The Chief, naked except for holster and pistol, was on the floor licking the boot of an otherwise naked young woman. Brennan was standing in front of two very young girls holding his robe open. Stewart was measuring the throat of a young woman with a ruler, apparently in preparation for oral sex. Rehnquist, clad in a woman’s bra and red garter belt, was parading before the others cracking a black whip.
White, a blindfold partially covering his glasses, was apparently engaged in some taxing sexual activity, though the cartoon did not make it clear what that activity was.

Powell was kneeling naked, his hands bound together, while a black woman in underwear marked “Exhibit A” flogged him.

Marshall stood by the side of the bench doing nothing but looking up at Douglas, who sat alone on the bench with a naked young boy at his side.

Blackmun was sodomizing a kangaroo.

Chuckling, Rehnquist passed the issue around the table. Most of them laughed. The Chief was angered both by the cartoon and the fact that it had been brought into conference.

Chuckling and angered... hard to picture that. [EXPLANATION: Rehnquist wasn't the Chief yet. "The Chief" refers to Burger. Don't know how that slipped my mind other than that I take weird delight in the impossibility of angrily chuckling.]

Afterward, Marshall sent a clerk to buy extra copies for his college-age children.

Brennan proudly told his clerks that while every other Justice was portrayed engaging in some sexual activity, he was pictured protecting several young children by blocking their view with his robe.

His clerks decided that they owed it to him to explain “flashing.”

Blackmun told his clerks how funny the centerfold was, especially the portion depicting Rehnquist “in drag.” The only problem, Blackmun said, was that he couldn’t figure out what he was supposed to be doing with the kangaroo.

The clerks drew straws to see who would tell him.