Row over public domain ASCII art in Japan

Computer geek/anarchist forum extraordinaire 2chan is in an uproar over the recent copyrighting of an iconic forum character by Avex, one of Japan's largest music producers. Many people are keeping an eye on this situation as it underlies a certain grey area in current copyright laws. To what extent can businesses corporatize public domain works? The jury is no where close to being in on this case, but in the mean time I'll try to fill you in on the details.