It's definitely unethical, there's no doubt there. And that's where the whole 'is it right or wrong?' gets muddy, because there is wrong in legal terms and wrong in ethical terms.
I think one of the saddest parts of this is that #1 and #2 were, at some point, friends enough to share ideas, or at least for #1 to share them with #2. There's a friendship lost in this, and to me, a friendship is more important than a fanfic -- and I guess that would go for both parties. If the friendship is really more important, then #1 could accept that credit was given and just be really cautious with #2 from this point on, and if the friendship is more important to #2, they could just remove the story and go back to being friends.
But, I'm not sure at this point that the friendship is as important to either, or even possible again. And when there's nothing to lose anymore, that's when it gets nasty.
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I think one of the saddest parts of this is that #1 and #2 were, at some point, friends enough to share ideas, or at least for #1 to share them with #2. There's a friendship lost in this, and to me, a friendship is more important than a fanfic -- and I guess that would go for both parties. If the friendship is really more important, then #1 could accept that credit was given and just be really cautious with #2 from this point on, and if the friendship is more important to #2, they could just remove the story and go back to being friends.
But, I'm not sure at this point that the friendship is as important to either, or even possible again. And when there's nothing to lose anymore, that's when it gets nasty.
And I understand your points perfectly. *hugs*