Hm, we just had a discussion with an upcoming lawyer, but of course in the US the laws might be quite different. Here it is like that: You have all your rights to your personality, including looks. So you would not be allowed to make a puppet doppelganger, only if the person made an order with you. However "persons of public interest" resign some of their personality rights anyway- by going on TV etc. So it is perfectly okay to take pictures of politicians, actors.... while they are "on public display"- it would be different if you filmed them on the beach during their vaccation. So parodies with puppets are not unheard of. But as I said- in other contries this might be quite different.

The problem with these sorts of things is that the law is complex. What you can and cannot due is often determined based on a combination of written law (laws passed by the government) and case law (relevant decisions made by judges in other cases). It's a very good idea to consult with an intellectual property lawyer who specializes in copyright and/or trademark law before launching any product that might get you sued. I know some people might think that is expensive and unnecessary, but anyone who can't afford to consult with a lawyer can't afford to be doing something that could potentially get them sued in the first place.

Generally speaking, selling a puppet of a celebrity like Britney Spears is not parody or fair use. You are marketing a product, which is a commercial activity and you would require Britney Spears' permission to use her likeness. This is why companies that market pencil cases, lunch boxes and other merchandise with the image of a celebrity (like Marilyn Monroe or Elvis) require a licensing agreement. On the other hand, performing a sketch with a Britney Spears puppet would probably qualify as a parody and is fair use.

Wikipedia has a good overview of Fair Use at http://en.wikipedia.org/wiki/Fair_use

You may also play it safe by not referring to them by name, let the characteristics of the puppet speak for themselves. Elvis could simply be "The King", Marilyn could be "Norma", and Britney could be..........I'll just leave that one open 

I guess really we should ask a lawyer.  I know there are a lot of companies that do make things with the likenesses of celebrities. Wish I had a lawyer friend I could ask.  Actually if you really think you could make some money at doing this it might be worth it to make an appointment with a copyright lawyer and ask them the question.

There are a couple of good copyright/lawyer (intellectual property especially) blogs out there on the net. Don't have links at hand, but a google search would probably turn them up. Actually, there are also copyright/lawyer forums too.

yeah that's what I was thinking too, there's stuff everywhere that I'm sure they don't get paid on.

This also kind of depends. The Che Guavara image that's popularly used is actually offered in the public domain by his family a good example of problems with copyrights, if I recall correctly, but see below. The problem is that it also depends on the way in which the person/copyright holder uses their copyrights; some may be ok with creative commons - and there are various levels of usage even there - some might not.

http://en.wikipedia.org/wiki/Guerrillero_Heroico#Current_legal_status

Here's another answer I got.... this is all confusing... I understand the whole "Brand" aspect, but the celeb parody argument goes a long way too for my original intent.

I'm not a lawyer but i'd be pretty confident that puppets of celebs fall under parody which is legal fair use (though if they we used in a way that was super offensive, the celeb could have a slander case which would be a harder arguement placed next to the parody arguement). I'd tend to say because of this such puppets are not illegal (unless as posted upthread you were saying falsely that it was in someway endorsed by said celeb)

I think people tend to over-rely on the concept of "fair use". Many countries do not have "fair use" laws or clauses. And in terms of slander/libel, that is also problematic depending on country. The UK actually requires the DEFENDANT to prove something is true, rather than the celebrity offering evidence of falsehood/libel/slander. (Search for info on the net about a journalist last year who got sued for writing about chiropracters) Depending on your country, you might just want to avoid even parody, since you could go bankrupt just trying to prove it.

Even assuming that someone is overseas won't help you, because large companies or well-known celebs might not care about the costs involved in overseas law suits. Not to mention that if you post your work on a website hosted in the US, it can easily be removed simply by the offended person submitting a DMCA request; hosts must follow through no matter where in the world the offended person resides. So costs might not be necessary, since a DMCA letter/email costs next to nothing and can have the offending material removed quickly. (Assuming that you use the puppet in an ad, video, or what have you)

In other words, it can often be simpler to just avoid copyright issues and invent your own stuff.