For those who are confused, this story is what it's all about: link
Now, technically, Fox is in the right to claim their copyright and license. However, their copyright in all probability extends only to the name "Jayne Cobb" and of course the trademark on "Firefly". Unless that hat were originally hand-made specifically for the show (and not just picked up by a costume person at a yarn shop), they have no rights to the actual design of the hat. Indeed, even if it had been a "work for hire" designed for the show, the hat shape is generic and common, so any copyright would only extend to the color pattern… and even that's iffy. There's nothing all that original about an ugly orange hat.
But the homemade hats still can't be sold as "Jayne" hats or "Firefly" hats. How much control that Fox has to actually stop people from selling orange and yellow pom-pom knit toboggans is probably nil. It would be like Paramount trying to get people to stop selling brown fedoras because of Indiana Jones. You can sell brown fedoras all you want— you just can't call 'em "Indy" hats. Likewise, you can sell ugly orange toboggans— you just can't call 'em "Jayne" hats from "Firefly." (Though Nathan Fillion tweeted that maybe the sellers should just rename them "enyaj hats from ylferif.")
I respect ThinkGeek for doing the right thing and purchasing a legal license to sell the "Jayne Cobb" hat (or whatever terms they use). The etsy people could have and should have done the same thing, if they wanted to really make a profit on the hats. But a big "pffft" to Fox for going overboard on the C&D letters— most of these Etsy sellers probably made squat off the hats, and the C&Ds have just hacked off Firefly fans, who are ill-disposed to like the Fox network in the first place.
Ill will is not smart business practice, even if you're in the right.
Especially for a show that was all about people screwing authority any way they could!
"I aim to misbehave."
By the way, ThinkGeek has responded to the controversy. Though they did not have anything to do with the C&Ds, they have decided to donate proceeds from the sales of their licensed Jayne hats to the Equality Now organization, a charity that fights against the sexual exploitation of women around the world (as well as related women's rights issues).
