People often claim that “EON can`t use Blofeld or Spectre because they don`t own the rights to them.” It`s more likely that EON doesn`t want to waste money on litigation over one character and one organization – they probably weighed the pros and cons and decided that it wasn`t worth the hassle. If EON had no right to Blofeld, then the FYEO pre-credit sequence would have been a copyright violation. The films FRWL, TB, YOLT, OHMSS, DAF, might either have to be edited or pulled from distribution (this might be a reason why EON doesn`t want to fight McClory in court over who owns the character).
There are enough details in the FYEO pre-credit sequence to prove that the bald man in the wheelchair is Blofeld. He`s bald, we never see his face, he has an Eastern European accent and he pets a white cat. Who else would it be? Would people who`ve seen all the Bond films have to be told that it was Blofeld? (Since people do realize that it`s Blofeld, this only prejudices EON. To prove his case, McClory, theoretically, only has to produce the alt.fan.James-Bond newsgroup postings where people refer to the character not as that unidentified bald guy, but overwhelmingly as Blofeld.)
Consider the context of the pre-credit sequence. It begins as Bond puts flowers on his late wife Tracy`s grave. This refers to the Bond film On Her Majesty`s Secret Service. In that film, the villain partly responsible for Tracy`s death, was bald and petted a white cat. It`s largely irrelevant that the FYEO pre-credit sequence doesn`t use the name Blofeld. In some countries, such as Canada and probably the United States and the UK, copying certain characteristics is sufficient to claim copyright infringement. If EON had no right to Blofeld, then they would have known that McClory could sue them in those countries under their respective copyright laws. FYEO would then either have to be edited, or risk being pulled from distribution. (Note that EON has sued and threatened to sue the makers of commercials who use a James Bond like character, even though the name James Bond is never used.)
EON presumably decided that there would be less chance of litigation if they were somewhat vague. EON could probably get an American Judge to rule that they also have the right to use Blofeld and Spectre, if they didn`t mind spending money on litigation. One last point. It seems dubious to claim that only McClory owns Blofeld, when the character also appears in the Fleming novels On Her Majesty`s Secret Service and You Only Live Twice. EON owns the rights to these novels. The 1963 settlement was arranged before You Only Live Twice was published.