The legal risk we need to be careful of concerns trademark. Trademark law covers symbols (such as names or logos or characters) that are used to identify a company and its products. The essence of the law is that if a symbol you're using would cause "likelihood of confusion" -- that is, if people who see your symbol would reasonably think that it means you're associated with someone else that you're not associated with -- then you can't use it because that would be misrepresentation. If you make profit on something BECAUSE people think you're associated with the trademark, then the owner of the trademark can sue for damages, but even without money involved you can be prohibited from using the mark.

Copyright actually isn't an issue because you can't copyright ideas, only tangibles like actual artwork or text. The idea of "a black dragon with no teeth" isn't copyrightable and you could use that. Strictly speaking you could even write another story that follows the general plot of "How To Train Your Dragon" without breaking any laws even without having to invoke Fair Use; you'd be considered a talentless hack and a ripoff, but not a criminal. (I've read Back to the Future ripoffs before.) Similarly, many cases of "art theft" where someone copies a design or a pose are actually not technically a crime, although anything that involves an ACTUAL copy, such as tracing, is a violation unless a Fair Use defense can be invoked. That said, we try not to make items that people would think are "stolen" because it just looks bad for us.