Japanese doujin circle souvenier circ. has ceased distribution of their Suzumiya Haruhi doujin game titled "The Fierce Fighting of Haruhi Suzumiya" (「涼宮ハルヒの激闘」) due to a request from Kadokawa Shoten.

According to Anime News Network, Kadokawa has requested that the game creators cease the distribution of their Dynasty Warrior-esque game. The game was marketed as a full on 3D brawler a la Dynasty Warriors featuring the members of the SOS Brigade. Kadokawa owns the rights to all usage of the Melancholy of Suzumiya Haruhi properties as it is the publisher of the original novel series by Tanigawa Nagaru and the distributor of both the adventure game for PS2 and the upcoming Wii title.
A screen from the unreleased game

This is not a first for companies administering cease and desists to fan circles. Kadokawa had previously requested that another doujin circle cease the distribution of their Keroro Gunsou puzzle game "Otoshimasu" in 2004 and Crypton Future Media just recently requested a stop on unofficial dakimakuras (DarkMirage) produced by a similar fan group.

While they are perfectly within their rights to issue these C&D's, should they be doing it? While doujinshi in general is clearly copyright violation, it has generally been looked upon as a sort of grassroots method of advertisements. When Crypton requested the cessation of the dakimakuras, fans worldwide called out because the only reason why Hatsune Miku gained her popularity was due to the incredible fan support on Nico Nico Video and other such sites. In a way, attacking the fan made content seems like attacking the fans themselves. On the other hand, should they allow this to happen, their property may get diluted and they may lose their copyright.

So what side of the fence are all of you on?