Andf that is a big misconception. Just because something is free to download doesnt mean its free to use anywhere.
Some “free” stuff is limited to personal use, which also excludes distribution, even for free.
In this stream, although about the broader side of the business, the topic of copyright and use of assets is touched on as well.
https://.youtube.com/watch?v=pbbAPq6vEiA
Just see it from this point:
If you make content with Sonic, you are responsible on how this installment of Sonic represents the franchise to the public which might not be matching with how SEGA wants a Sonic expirience to be.
In this case it doesnt matter how free your game is. As SEGA I would simply say “NO” to preserve control over the IP.