When the editors of a collection of new Holmes-related short stories wanted to avoid paying the fee, the estate threatened to prevent the book from being sold on Amazon and Barnes and Noble. As a character, Holmes was developed over the course of Conan Doyle's entire writing career, not laid out in a single book, the estate claimed.
But Judge Rubén Castillo ruled otherwise, saying that every Holmes story that followed the first ought to be considered a derivative based on the original. As far as the court is concerned, Holmes and Watson were fully formed characters by the last page of "A Study in Scarlet." Since anything published before Jan. 1, 1923, is considered public-domain by law — a fact that covers 50 of Conan Doyle's tales d'Sherlock — the editors of the Holmes-derived compendium titled "In the Company of Sherlock Holmes" don't need to pay up.
The caveat, of course, is that anything Holmes published in or after 1923 still enjoys protection, meaning that any element that appears exclusively in those stories can't be used.
The impact of Castillo's decision probably won't be limited to Sherlock Holmes. Some of pop culture's most important characters, such as Mickey Mouse and Superman, will see their copyrights expire in the next couple of decades. If a "this-but-not-that" approach to copyright winds up taking hold, we might expect a debate soon about which features of those characters will be covered (and not covered).