If this character was unique and created by the husband, then the friend did NOT have any legal right to copy it. You have a copyright on what you create, whether you legally file for it or not. I don't want to stray into legalities, but I also don't want OTHERS who stray into legalities to have incorrect info. So we should probably drop that line of conversation.
But I also would consider this a big piece of damage to my friendship with Kathy.
This is one of the ways in which I am really sort of weird and hypersensitive about boundaries. I don't like people just suddenly using nicknames; I don't like people adopting my own or my family's little "things."
My husband and I developed a special ring to the apartment buzzer--"shave and a haircut, two bits" means "I need you to come straight down and help me, don't wait and ask who it is, etc., first. Just come down as soon as you possibly can." (We developed this when I would drive home w/ sleeping kids in the car--if I waited for him to answer the buzzer and me to explain that I needed him, then I had to leave them alone in the car too long; I was afraid someone would call CPS.)
My MIL thought it was cute and started to use it. It annoyed me. Partly it annoyed me because she'd use it to mean "Hi, I'm here"; partly it annoyed me because it was OUR family's signal, not hers. I started taking it literally and coming down all the way, and then I would say, "Please don't use that buzz to mean that you've arrived--it has a very specific meaning in our house, that you need help with something down here right away."
She stopped using it. (If she'd used it properly, it would have been more OK--I would have been a bit disgruntled but I would have thought that was mildly unfair of me, and I'd have just lived with it, or talked myself out of feeling that way.)
I've had little "things" w/ my kids, little nicknames or routines, and I do NOT like it when other family members try to do it too.