>>20585255"There are two ways that derivative rights are protected under copyright law.
First, the derivative work has protection under the copyright of the original work. Copyright protection for the owner of the original copyright extends to derivative works. This means that the copyright owner of the original work also owns the rights to derivative works. Therefore, the owner of the copyright to the original work may bring a copyright infringement lawsuit against someone who creates a derivative work without permission.
Second, the derivative work itself has copyright protection. The creator of the derivative work owns the copyright to the derivative work. This can either be the creator of the original work, or someone else who has obtained a derivative work license from the holder of the original copyright.
The copyright of a derivative work is separate from the copyright to the original work. Therefore, if the copyright holder gives someone a license to create a derivative work, the holder retains the copyright to the original work. In other words, only the derivative rights are being licensed."
Walfie holds copyright over his designs even if the fanart infringes upon the Hololive copyright.
Cover can protect its copyright by demanding Walfie works be taken down, but they cannot unilaterally take control of Walfie's copyrighted work, which is the chibi-style design.
