Q: Can I use copyrighted assets for parody project and get compensation through donations for said project?
I created a video game addon that used official images of Flex Seal products and Phil Swift's likeness. I emailed his company asking if I could make a donation page to get a small amount of compensation from the addon and they said no. I then asked if I could continue to make the project for free and they told me to take the entire project down. Can you tell me what legally constitutes as parody so I can change my addon so it complies with copyright and can continue to work on it? I've seen other forms of parody with that brand in the form of funny YTP YouTube videos that can still get monetized, so how is my addon different than that and how come that form of parody can be kept up and monetized while mine can't make money and needs to be taken down?
A: You DEFINITELY should consult with an attorney to assess your risks
Parody is a variation of right of fair use, which limits the exclusive rights to a copyrighted work. It is very much a gray area, not subject to a definitive answer. Fair use is assessed based on (1) the purpose and character of the use, including whether it's commercial or for nonprofit/educational purposes; (2) the nature of the copyrighted work; (3) the amount and substantiality of the work used in relation to its totality; and (4) the effect of the use upon the potential market for or value of the work.
At the outset, I'd ask whether your work is a parody of Flex Seal or Phil Swift, or whether it's simply using these recognizable images to get the attention of the gamer (and thereby to make money). Even if your work is genuinely parody, it might fail on any of the above prongs of analysis (especially #1 and #3). Given the fact that you've already been denied permission, I'd be very careful. Even if you think you have a valid fair use exception, you won't know for sure until the court ruling is issued, several 10s of thousands of dollars later.
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