(4) Whether the new use affects the potential market for the original work.
With different weights applied to each clause by situation. However, as the Etsy article states, #4 is typically weighed most heaviest by courts. Since Disney does not sell a Vader keycap in any form, I'd argue that CC doesn't affect the potential market at all for Star Wars merchandise.
The fact that they were a one-time, limited run strengthens that argument even more. Just because CC made a Vader keycap, does not mean he broke copyright on Disney's Star War's trademark. I'd be willing to bet that any decent IP lawyer can come up with a solid fair use defense in this case.
Just for Devil's advocate (read: I do not support the counterfeits ):
Do you think that the fake clacks will affect CC's ability to sell his own clacks?
Personally, I don't think this has an affect on CC at all. I don't believe CC's own business has been touched by this, and if anything, the exposure from K3KC has made the demand, and the aftermarket value, of real Clacks jump up.
Nothing like a good controversy to drum up business
*Insert PT Barnum Cliche Here*
But on a more serious note, it's actually the reason why large brands largely don't care about counterfeits. Forget markets in Asia, there are markets in most major US cities where you can find knockoffs.
However, largely, the knockoffs only serve to reinforce the brand exclusivity, and causes the original brand to only increase in value. Numerous marketing studies have shown this already, and even the Harvard Business Review agrees with this notion:
https://hbr.org/2014/04/think-differently-about-protecting-your-brand/"Authorized or not, brand awareness in a new market is usually a good thing. And increased brand exposure can lead to a migration from counterfeit to original goods when the economic climate of that market improves or discretionary spending increases."
Essentially, counterfeits in the market only serve to "boost brand exposure and expansion without significant investment."
Other institutions have found similar results:
http://upstart.bizjournals.com/views/blogs/market-movers/2007/07/27/when-counterfeits-increase-brand-value.htmlDolce and Gabbana is one of the most counterfeited brands in the world, yet are completely unwilling to help law enforcement due to the fact "that the existence of counterfeits only serves to enhance the desirability – and sales volumes – of the real thing."
This article
http://www.intangiblebusiness.com/news/marketing/2006/05/brand-piracy-faking-it-can-be-good summarizes it the best:
"product's values is also not diluted as the owner of the counterfeit products knows it is just that, a fake, and therefore does not expect the same performance from it. In fact, decisions to purchase the counterfeit products usually reaffirm the brand's values as the recipient buys the article to project the very image the brand is trying to portray through its advertising and promotion. This endorsement encourages loyalty, generates awareness and strengthens the brand's values with the owner of the fake as well as everyone with whom they come in contact."
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Just food for thought, and though it may be extremely unintuitive to some users here, but in most cases counterfeiting only serves to boost prices and demand. This topic has been exhaustively studied by marketing firms and corporations, and that's why counterfeits are largely tolerated. This line of logic is another reason why I believe that CC's own business has not been affected, and in fact, has only strengthened his own brand. Take the current sale for instance. Items are typically sold within seconds of listing. The total length of the sale is ~60days, and the price ranges from $50-120 for a cap. Even if every cap was $50, that's $3000 over 60 days.
Not bad at all, but utterly impossible without a strong branding. There are literally hundreds of users constantly refreshing that page. In 30 days alone, that thread has received over 1.2M views. There are still 30 days to go.