Most of the usage I've seen or even tried myself is like "Sonic the hedgehog doing a kickflip". It kind of makes it obvious in my opinion that yeah, this is pretty much not right. Even worse I'm seeing things like "Sonic the hedgehog artstation in the style of (artist xyz)". Is it just ripping artists images from art station without explicit permission?
It's my understanding that a lot of branded material(like "sonic the hedgehog") was filtered out of training data so that the copyright challenges were limited to small holders that can't fight back instead of large holders like Sega and Disney.
So any prompts expecting copyright characters is going to end up wierd because of lack of training data.