Once you start studying non capitalist propaganda, the idea of "intellectual property" becomes transparently harmful. Copyrights don't protect ideas, they protect the wealth of rich people.

I have, in the past, kind of wished that settings and characters could not be copyrighted. I realize that there's work that goes into creating each, but I think that we could still live in a world where those weren't protected and interesting stuff still gets created. If that were to happen, then I agree, it'd be necessary to make it very clear who created what, since the setting and characters alone wouldn't uniquely identify the source.

Like, there are things like Greek mythology or the Robin Hood collection of stories, very important works of art from our past, that were created by many different unaffiliated people. They just couldn't be created today with our modern stories, because the settings and characters would be copyrighted and most rightsholders don't just offer a blanket grant of rights to use them.

That's actually one unusual and notable thing H.P. Lovecraft did

if you've ever seen stuff in the Cthulhu Mythos, that's him. He encouraged anyone who wanted to do so to create stuff using his universe. One reason why we have that kind of collection of Lovecraftian stuff.

But you can't do that with, say, Star Wars or a lot of other beloved settings.

It should fall under more general laws against fraud. The main harm in copyright violation is copying something and claiming to be the original author, thereby stealing credit for it. If a reasonable person would mistake your product as coming from the original source, then you have committed fraud and should be held liable for damages.

However, if you make a spinoff and it's obviously distinct such that a reasonable person wouldn't mistake your work as coming from the original creator, that should be protected.

So yeah, if I want to make a Pokemon game and it is very distinct from anything The Pokemon Company has worked on (either directly or indirectly), then it should be totally fine. The only copyright violation is if I directly copy any artwork, but if I produce my own renditions, I should be in the clear.