Hiya Larry!
If you're serious about doing this and going to pay the application fee and everything it would probably be a very good idea to speak with a copyright, trademark or entertainment lawyer. Even if you can't afford to have them apply for you (that is the best way really) it is definately worth it to at least do an affordable 30 minute consultation so you can learn as much as possible. I did one of these and it cost me $100 but it was money well spent as I learned tons of things.
Also, just for anyone interested in copyright in general:
Remember that the purpose of copyright law is to encourage creative work by granting a temporary monopoly in an author's original creations. This monopoly takes the form of six rights in areas where the author retains exclusive control. These rights are:
(1) the right of reproduction (i.e., copying),
(2) the right to create derivative works,
(3) the right to distribution,
(4) the right to performance,
(5) the right to display, and
(6) the digital transmission performance right.
The law of copyright protects the first two rights in both private and public contexts, whereas an author can only restrict the last four rights in the public sphere. Claims of infringement must show that the defendant exercised one of these rights. For example, if I create unauthorized videotape copies of Star Trek II: The Wrath of Khan and distribute them to strangers on the street, then I have infringed both the copyright holder's rights of reproduction and distribution. If I merely re-enact The Wrath of Khan for my family in my home, then I have not infringed on the copyright.
Trademark law, in contrast, is designed to protect consumers from confusion as to the source of goods (as well as to protect the trademark owner's market). To this end, the law gives the owner of a registered trademark the right to use the mark in commerce without confusion. If someone introduces a trademark into the market that is likely to cause confusion, then the newer mark infringes on the older one. The laws of trademark infringement and dilution protect against this likelihood of confusion.
Infringement protects against confusion about the origin of goods. The plaintiff in an infringement suit must show that defendant's use of the mark is likely to cause such a confusion. For instance, if I were an unscrupulous manufacturer, I might attempt to capitalize on the fame of Star Trek by creating a line of 'Spock Activewear.' If consumers could reasonably believe that my activewear was produced or endorsed by the owners of the Spock trademark, then I would be liable for infringement.
The law of trademark dilution protects against confusion concerning the character of a registered trademark. Suppose I created a semi-automatic assault rifle and marketed it as 'The Lt. Uhura 5000.' Even if consumers could not reasonably believe that the Star Trek trademark holders produced this firearm, the trademark holders could claim that my use of their mark harmed the family-oriented character of their mark. I would be liable for dilution.
(the above info is taken from the web site of
Chilling Effects)
It's also important to remember that you do not have to formally copyright something to enjoy copyright protection, however formal registration is very helpful if you ever have a legal battle over one of your creations. If like Foz's Muley you plan to use something as a signature character for years or if you derive a lot of your income from a particular character it is probably worthwhile for you. If you just build puppets for fun in your spare time it may not be worth the time or money involved for you.
Another thing to anyone thinking about copyrighting their characters to remember is that if you want to protect your original character you probably shouldn't make your versions of Muppet characters (you actually shouldn't regardless, but that's a debate we've already had here...) because it's much more difficult to protect your legal rights in court if you have been busy infringing on those of someone else.
Again, it really is best to talk to lawyer at least once so you have a clear understanding of all this.
Some semi-helpful copyright links:
Copyright Basics & Myths -
http://www.sfwa.org/Beware/copyright.html
The Copyright Files -
http://aimee.wyvernweb.com/copyright/
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