10 hours ago, mileafly said:
is it allowed to have hats and masks etc in the game that refers to other products?
There is no single source for "allowed". The details of it is legal or not depend on a long list of factors, including who came up with the idea, how distinctive the implementation is, how well known the products are, and if there are any copyright registrations, trademark registrations, how it is used, where it is used, and much more.
And "allowed" can also refer to permission. With a enough money changing hands almost anything is "allowed".
Although people like to think their game falls under one of the "fair use" or "fair dealing" exceptions, games almost never do. If you are sued, claiming fair use is an affirmative defense meaning you are admitting guilt but believe you fall into an exception. If the courts or arbitrator decide the exception does not apply (and it will not apply) then you become liable for intentional violations and will be ordered to immediately make it right. Usually making it right involves transferring of piles of money, plus immediately stopping the use.
This needs to be repeated for every object and property being used. Their game references products now owned by Disney, by Nintendo, by Hasbro, by Warner Brothers, by Marvel, and more. Each of those products would need legal permission or risk legal action.
10 hours ago, mileafly said:
I am unsure what the legal procedure is around this though if any?
Work with a lawyer to get proper legal clearance. That means if your company doesn't own the thing, having your company's people work with their company's people to negotiate permission.
If you cannot afford that, then you certainly cannot afford the legal challenges that will come when they send legal demands and lawsuits your way.
Some groups also rely on obscurity. As long as their project is so small that nobody ever knows about it, they'll never be sued. But if their project grows and becomes successful they will be noticed, and they will lose what they created.
As long as the product is small enough few companies will bother to sue. The cost and effort aren't worth it. When they're small the company will officially not notice the products. But once they are big enough the company is required to defend their brands or risk losing them, so they'll invoke the law and get it shut down.