The term prior art come from patent law. It describes "This invention has been there before and thus is not patentable" - it has nothing to do with copyright and intellectual property in the sense of copyright.
Copyright is the right of an author to limit the use of their expression of an idea. It is affixed to the descriptions and looks of characters just as much as their personality as depicted. It is granted for the life of the author and a period after that. after that, it falls into public domain.
Let me give an example:
- The idea of a 9-tailed fox turning into a woman is from mythology - Kitsune are Public domain.
- Ahri on the other hand is not just any Kitsune, she was created by the team that made league of legends, given a very specific look and voice lines, and a somewhat complex background was written to her. That makes Ahri an expression of the idea of a Kitsune.
- Beings of elemental water that change their shape are often called water elementals, which is a subtype of what TvTropes calls Elemental Embodiment.
- Morphling is one specific form of water embodiment developed by the DOTA2 team. It also is based in part on the DOTA map for WC3, which makes his case particularly muddy in who actually is allowed to do what with him or his models...
Without a license, you can use a Kitsune, but not Ahri. Without a license you can use a water-elemental but not Morphling.
Do you want to know more?
I suggest looking at Law.SE: