RE: Question regarding use of KittyCatS photos/images
The LL ToS specifically allow you to create an image which incidentally includes others intellectual property, such as KittyCatS.
This generally applies in the Real World, as well. Otherwise, you could not take a selfie of yourself on Times Square because somewhere in the background is the Sony logo or some advertisement, or even the facade of a building (which may be the copyrighted work of the architect).
Of course, this may all change if the new law in the EU takes effect.
I do wish people would stop saying "free" as if price (or the lack thereof) effects the intellectual property rights: it does not. Full stop.
As a general rule, ask: what is the subject? If you're taking a picture of a friend's avatar, and a KittyCat appears in the background, you do not need a license for the KittyCat IP in that image (the ToS granted it to you). Similarly you generally don't need the permission of the creator of the mesh head, hair, skin, clothing, etc., but you might need it from the creator of the blush applier on her avatar if that is the subject of your image and you're not using it in some 'fair use' manner such as a side-by-side comparison to your own blush applier (illegal) as opposed to a blog post highlighting the mistakes in that applier (legal).
Nowhere in the discussion does price appear. If it's illegal to charge for the image, it's also illegal to give it away for free.
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