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Smashchu said:
Ok, so Nintendo let them go becuase they were losing money on them. I see. Makes sence. So Nintendo just took over their original IPs and let them go.

I ask beecuase I was thinking that Rare characters would be cool in Brawl, and that led to me wondering why they were let go in the first place.

 The mine in SSB:M was originally supposed to be from Perfect Dark.  I guess Sakurai and co. go wind of possibly losing Rare (and the PD franchise) last minute, and had references to PD subtley changed.  I think they didn't get around to doing that for the Japanese version.

Nintendo owns every character that appeared in a Donkey Kong game, but they don't own any of the non-DK characters from Diddy Kong Racing, or Banjo Kazooie (or PD, incidentally).  I'm not sure who owns Killer Instinct or Battletoads.