Thank you Tavish, that's exactly what I was getting at. In fact Goodkind's reasoning isn't entirely flawed - were he to knowingly ignore people using his work, it could potentially make it more difficult for him to defend against similar use in the future, which in turn would make his work less desirable to license to others (for example a commercial MMORPG with exclusive rights to use his theme would have to deal with a load of free competitors, making his work less appealing).
By dealing with those individuals now, he's saving himself future headaches - but unlike trademark law, he's not forced to defend his copyright or risk losing it. Indeed some authors are more than happy to see any kind of fan fiction - so it is always worth asking.
But as pointed out in Tavish's first reply, when the author says "no" it is better to just move on. Even if you're not bothered about the ethics of using someone's work against their expressed wishes, the fact remains that it only takes one disgruntled player who reports you and you'll be forced to discard many hours of work.
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