[DF] Holy water seems to have no purpose

[Bruno]

Originally Posted by Lonewulf

--Tentacles on face.
--Otherwise humanoid body.
--Can drive you insane through telepathic abilities.

If you stuck to that level of inspiration you'd be fine. Cthulhu's in public domain in most jurisdictions so the case probably wouldn't go anywhere. Pick a name that isn't much like Mind Flayer (or Illithid), and you're set. Skull Squids?

The more details you add to make it "like a mind flayer" - especially for the important Dungeon Fantasy purpose of combat tactics - the more rope you're stringing up to hang yourself on. Also important is all the non-combat fluff describing their culture and history (TSR published I think three whole supplements on mindflayers IIRC, there almost as lovingly documented as the Drow).

How far down the list of details you need to go before you're in serious legal trouble is a question for a lawyer, but I suspect that "area effect short-duration mental stun" combined with "extracts brains from helpless targets eats them" would be a kiss of death identifying combo. Making them purple or lavender colored would also start getting into dangerously identifiable territory.

This is the problem with trying to rip someone off. The only way to know where to find the boundary is a court case. Or asking the victim which tends to tip them off that you're up to something shady.

It's not like chemistry where you can say with confidence that dropping two grams of reagent X into twenty grams of reagent Y will result in a safe reaction, but dropping 2.001 grams in will cause the reaction to spiral out of control and spray reactive chemicals all over your workstation.

It's a legal case - which means that until it's written down after a judge makes his final decision, there is no exact line. And that exact line is ONLY exact for that exact case involving that exact infringement - for other similar situations you still end up with paying a lawyer 600$ for his opinion that you'd probably win the lawsuit in your particular case based on that precedent... but he probably won't sign a guarantee stating he'd give you your $600 back if you end up loosing.