While Ethereal Entertainment's Faceless has been a top vote-getter on Steam Greenlight since the platform's launch in September, Valve has decided not to publish the game on Steam because of copyright concerns, according to Joystiq. Faceless is a free-to-play multiplayer survival-horror modification for Half-Life 2 based on the Slender Man urban legend that apparently finds its origin story in the Something Awful forums circa 2006 and became a viral phenomenon.
According to developer Justin Ross, the Slender Man idea is a "free-to-use entity" and that he obtained the proper permission to use it from the guy that created it - Something Awful user Victor Surge. Ross also pointed out that a similar game called The Intruder takes inspiration from the legend made it through Greenlight in October.
Apparently the blessing from Surge has not moved Valve, because a third party owns the option rights to Slender Man and could license the property for media such as movies and video games.
"We'll need their permission too," Valve told Ethereal.
The developers are in negotiations with the option holder, and once the proper paperwork is signed, Faceless should be ready to launch on Steam, according to Ethereal. Right now Ross says that negotiations are kind of stalled at the moment.
Faceless is set for closed beta testing in December, and the full version is set to launch in March on PC.