Hmm, so they can. I suppose if it could eat into potential sales they would have a case (Chrono Resurrection was a remake, so if someone got that instead they wouldn't have much reason to buy the original). Fan game sequels of Zak McKraken and others have been made, and I doubt you would get into trouble for playing it since it isn't you who infringed copyright, if someone produces and sells a product that infringes on copyright it is not the customers fault but the person who produced it.

You are reffering to Square Enix there, the tyrannical approach they have to fan made projects is world famous.

I don't see Sega doing an anything here, since full flash sonic games are plastered all over the net without a peep coming from sega as to their legality. Also, as flintlock states the amount of sonic fan fic would elicit a response by sega. Yet they have let it continue unabated, even the heavily erotic ones.