Comic books grew in popularity during WWII for several reasons. One reason was that many superheroes battled against the enemies of America during the war. Captain Marvel was no exception. During this period Captain Marvel comics began to outsell everything else, even Superman. At its height, Captain Marvel Adventures was selling nearly 1.3 million copies every two weeks.
In 1941, Detective Comics, the company that owned Superman, sued Fawcett and Republic Pictures, saying that Capitan Marvel was a violation of their copyright. They claimed that because he was super-strong and invulnerable, and did many of the same things Superman did (fought crime, threw cars around, flew, etc), and many Captain Marvel drawings resembled Superman drawings, Captain Marvel was in violation of Superman's copyright. DC had successfully stopped a couple of other characters through threatened or actual lawsuits. Fawcett answered by saying that because a certain series of the Superman newspaper strip had been printed by the McClure Syndicate without the copyright notice, Detective Comics had abandoned their copyright on the character.
After many delays, the case was tried in 1948, by which time Detective Comics, Inc was known as National Comics Publications.. It was decided that although the similarities between Captain Marvel and Superman were great enough to constitute copyright infringement, the lack of proper copyright citation in the McClure Syndicate strips did constitute abandonment. National appealed.
The appeal was heard by Judge Learned Hand, who ruled that there was no expressed intention by the original copyright holder to abandon Superman, and sent the case back down to the original court. Since it had been decided that Captain Marvel was in violation of Superman's copyright, it now had to be decided what the damages would be. The basis for this was to determine how much Captain Marvel material had been copied from Superman material. Fawcett made the case that there was Superman material copied from Captain Marvel material (in those days almost everyone copied from everyone), and this would mitigate the damages owed. So staffers were put to work on both sides poring over Superman and Captain Marvel comics, looking for matching pictures.
At this point in history, comic books were loosing sales, superheroes in particular. Captain Marvel was only doing half the business he had during the war. There were also rumblings of social pressures against comic books, such as Dr. Frederick Wertham's book Seduction of the Innocent. With the expense of the court case combined with the declining income from comic books, in 1953 Fawcett made the financially responsible and business-wise decision to settle out of court. They agreed to pay National $400,000 and not to produce Captain Marvel comic books. At the same time they shut down their entire comic book line.
During the next 13 years the name of Captain Marvel was gone from comic books but far from forgotten. He was mentioned in the Broadway musical West Side Story (which came out the same year as The Music Man, which anachronistically mentioned Captain Billy's Whiz Bang). He was mentioned in the Beatles song Bungalow Bill. The word “Shazam” was used regularly by the TV character Gomer Pyle and once by Peter Tork on the TV show The Monkees.
Quick Trivia: Fawcett did produce one other comic book line after the 1953 settlement: Dennis the Menace, 1958-1980
Next: The British Marvel