Well, from what I understand, you can't just create a cake with licensed or copyrighted artwork like Disney. Please correct me if I'm wrong on this.

Are there any cartoons or characters which aren't protected under this? And how do you get around this if there is a way at all? I know you can place figures and whatnot into a 'scene' and it's legal to do.

I've been checking out some of my local cake competitors and many of them show TONS of different character cakes... everything from Batman, Cars, Little Mermaid, Hello Kitty, etc... HOW ON EARTH can they do this legally? There's no way they have all the licenses to replicate the art- I thought the licenses to do so were quite expensive? Any advice or thoughts? I'm located in MA, fyi. (not that I think that is very relevant to my question- lol)

I think there are two threads on this right now. They are not doing it legally unless they obtain permission. This very clear law keeps getting "debated" with a lot of wrong information ending up in the threads. My suggestion is to look up the law yourself. It is very easy to find and very clear. If you would like to know how I handle the same situation with information on my site, pm me.