I see there's a lot of sites out there that offer ready made avatar modifications and templates as free downloads. Can they do that, legally I mean? Doesn't that interfere somehow with people who design this stuff in game ands sell it? Aren't there ways for people to protect their interests somehow?
I think you might be confusing the issue here, that is if you are referring to sites like this one: http://www.slboutique.com/chipmidnight/
No one (as far as I know) is making money in game by selling avatar body templates. And even if they were, what do you suggest be done against those who would offer their own user-created content for free? Monopole isn't a popular word in the SL community, you know.