PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT
CALDERWOOD & HARKNESS LLP 600 South Grand Avenue, Suite 4400 Los Angeles, California 90071 Telephone: (213) 555-0100
MEMORANDUM
Date: April 15, 2024
To: Catherine Bloom, Responsible Partner, intellectual Property Alan Ngo, Billing Partner, intellectual Property
From: Omar Siddiqui, Lead Associate, intellectual Property Christy Bauer, Working Associate, intellectual Property
Re: Defense Strategy — Fair Use and Independent Creation Analysis Luminos Interactive LLC v. Redstone Gaming Corp., Case No. 2:24-cv-00587-RWL (D. Nev.)
Matter No.: 1033-00004
CONFIDENTIALITY LEGEND: This memorandum constitutes attorney work product prepared in anticipation of litigation and is protected from disclosure under the work-product doctrine. It also contains information subject to the attorney-client privilege. The mental impressions, conclusions, opinions, and legal theories contained herein reflect the protected work product of Calderwood & Harkness LLP. Do not distribute outside the engagement team without prior authorization from the Responsible Partner.
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I. Executive Summary
The purpose of this memorandum is to analyze and recommend the defense strategy for our client, Redstone Gaming Corp. ("Redstone" or "RGC"), in the copyright infringement action brought by Luminos Interactive LLC ("Luminos"), filed on March 18, 2024, in the United States District Court for the District of Nevada, Case No. 2:24-cv-00587-RWL, assigned to the Honorable Rebecca W. Langford. Plaintiff Luminos is represented by Daniel Hargrove and Megan Forsyth of Hargrove, Tanaka & Whitmore LLP, located in Austin, Texas. Our local Nevada counsel on this matter is Patricia Thorngate of Thorngate & Associates, PC, in Las Vegas, Nevada.
Luminos alleges that Redstone's flagship multiplayer title, Ironclad Dominion (released November 14, 2022), incorporates character designs, environmental textures, and user-interface ("UI") elements that are substantially similar to visual assets from Luminos's earlier indie title, Shardfall Chronicles (released March 22, 2021; copyright registration VA 2-254-781, dated June 8, 2021). Luminos's Complaint specifically challenges thirty-seven (37) visual assets within Ironclad Dominion, broken down as follows: twelve (12) character armor designs, nine (9) environmental crystal textures, eight (8) UI icon sets, and eight (8) background matte paintings. Luminos seeks injunctive relief in the form of an order compelling the removal of all allegedly infringing assets from Ironclad Dominion, actual damages of twenty-eight million five hundred thousand dollars ($28,500,000) based on an apportioned profits theory (calculated as $312 million in first-year revenue multiplied by an alleged 9.13% apportionment factor), statutory damages in the alternative, and an award of attorney's fees and costs.
After reviewing the Complaint, the relevant development records, and applicable case law, we recommend structuring Redstone's defense around three principal pillars: (1) independent creation, supported by version-control metadata demonstrating that the challenged assets were created before Shardfall Chronicles was publicly available; (2) scènes à faire and merger doctrine, establishing that the challenged visual elements are unprotectable genre conventions ubiquitous in the fantasy-RPG game category; and (3) fair use under 17 U.S.C. § 107, demonstrating that any arguable use of common visual elements in Ironclad Dominion is transformative, de minimis in scope, and has had no adverse effect on the market for Shardfall Chronicles.
We believe these defenses — particularly fair use — present strong grounds for dispositive motion practice, potentially at the summary judgment stage following the development of an adequate evidentiary record through fact and expert discovery. To support these defenses, we recommend the immediate retention of Dr. Ingrid Lautner, Professor of Digital Media and Game Design at Pacific Western University, as an expert witness for visual-asset comparison analysis. We further recommend the retention of Brindoval Forensic Consulting LLC for metadata verification of Redstone's development records, and Evergreen Valuation Group LLC for preparation of a damages rebuttal report.
This memorandum details the factual and legal bases for each pillar of the defense, addresses Luminos's damages theory, identifies expert witnesses and consultants, discusses insurance coverage, and proposes a litigation plan and timeline. We respectfully request approval to proceed with the recommended strategy and consultant retentions as outlined herein.
II. Background
A. The Parties
Redstone Gaming Corp. Redstone is a Delaware corporation, publicly traded on the Nasdaq Stock Market under the ticker symbol "RDST." The company maintains its principal executive offices at 4100 Obsidian Tower Boulevard, Suite 2200, Las Vegas, Nevada 89109. Redstone's registered agent in Delaware is Capitol Registered Agents, Inc., located at 1209 Orange Street, Wilmington, Delaware 19801. The company is led by Chief Executive Officer Marcus Hale and General Counsel Priya Venkatesh. Jordan Kessler serves as Vice President of Creative Development and oversaw the development of Ironclad Dominion from its inception. Seo-Yeon Park serves as Lead Character Artist and was principally responsible for the creation of the character armor assets that are among the visual elements challenged by Luminos.
Redstone is a major player in the interactive entertainment industry, employing approximately 4,200 individuals across its Las Vegas headquarters, satellite development studios, and supporting offices. For fiscal year 2023, Redstone reported revenue of approximately $1.87 billion. As of April 2024, the company's market capitalization stands at approximately $6.4 billion. The company's size, financial resources, and public profile are relevant to our assessment of litigation strategy, jury perception, and the commercial-nature inquiry under the first fair-use factor.
Luminos Interactive LLC. Luminos is a Texas limited liability company with its principal office located at 802 Brazos Creek Lane, Suite 5, Austin, Texas 78701. The company's registered agent is Texas Statutory Agents LLC, 1601 Rio Grande Street, Austin, Texas 78701. Luminos was co-founded by Tobias Crane, who serves as Founder and Managing Member, and Elara Whitfield, who serves as Art Director and Co-Founder. Luminos is a small independent game development studio employing approximately fourteen (14) individuals.
For fiscal year 2023, Luminos reported revenue of approximately $2.1 million. The significant revenue disparity between the parties — Redstone's $1.87 billion versus Luminos's $2.1 million — is a factor we must be mindful of throughout this litigation. While the disparity has no bearing on the legal merits of the copyright claims, it has the potential to generate sympathetic framing for Luminos before both the Court and any future jury, and our strategy must account for this dynamic.
B. The Underlying Works
*Shardfall Chronicles. Shardfall Chronicles is an indie action-RPG developed by Luminos. The game was released on PC via a third-party digital storefront on March 22, 2021. It features a dark-fantasy aesthetic characterized by crystalline environmental textures, stylized armored character designs, and a distinctive radial menu user interface. The game has achieved approximately 185,000 lifetime unit sales at a manufacturer's suggested retail price ("MSRP") of $24.99, yielding estimated gross revenue of approximately $4.62 million. Luminos filed a copyright registration for the audiovisual elements of Shardfall Chronicles* on June 8, 2021, and was assigned registration number VA 2-254-781 by the United States Copyright Office. This registration establishes a presumption of ownership and validity of the copyright, which we do not anticipate challenging.
*Ironclad Dominion. Ironclad Dominion is a AAA multiplayer tactical RPG developed by Redstone. The game was released on PC and major console platforms on November 14, 2022. In contrast to Shardfall Chronicles' dark-fantasy aesthetic, Ironclad Dominion features a distinctive mechanized-fantasy and steampunk visual environment, incorporating armored warrior characters, industrial-era machinery, and a contextual radial heads-up display ("HUD"). Development of Ironclad Dominion commenced in the first quarter of 2020, approximately January 2020. The first commit in the game's primary version-control repository — designated "ironclad-main" and maintained in Git — is dated February 12, 2020, which is more than thirteen (13) months before Shardfall Chronicles* was released to the public.
Ironclad Dominion generated $312 million in revenue during its first twelve months of commercial availability (November 2022 through November 2023). The game has been a critical and commercial success for Redstone, contributing significantly to the company's overall revenue and market position. The development timeline and the authenticated provenance of the game's visual assets are central to our independent-creation defense, as discussed in detail in Section III below.
C. Luminos's Complaint
Luminos filed its Complaint on March 18, 2024, in the United States District Court for the District of Nevada. The case has been assigned Case Number 2:24-cv-00587-RWL and is before the Honorable Rebecca W. Langford. The Complaint alleges a single cause of action for copyright infringement under 17 U.S.C. § 101 et seq.
The Complaint identifies thirty-seven (37) specific visual assets in Ironclad Dominion that are alleged to be substantially similar to corresponding assets in Shardfall Chronicles. These assets fall into four categories:
• Twelve (12) character armor designs, which Luminos contends replicate the silhouettes, ornamental detailing, and proportional relationships of armored character models in Shardfall Chronicles;
• Nine (9) environmental crystal textures, which Luminos alleges reproduce the color palettes, faceting patterns, and luminescence properties of crystalline cave environments in Shardfall Chronicles;
• Eight (8) UI icon sets, which Luminos claims are substantially similar to the radial menu interface elements in Shardfall Chronicles; and
• Eight (8) background matte paintings, which Luminos contends share compositions, color grading, and structural elements with landscape assets in Shardfall Chronicles.
Luminos's damages theory is based on an apportioned profits model. The Complaint asserts that the allegedly infringing visual assets accounted for approximately 9.13% of Ironclad Dominion's overall commercial appeal, yielding claimed actual damages of $312,000,000 × 9.13% ≈ $28,500,000. As discussed in Section VI below, we believe this apportionment figure is unsupported, conclusory, and vulnerable to challenge.
In addition to actual damages, the Complaint seeks: (a) injunctive relief compelling the removal of the allegedly infringing assets from all current and future distributions of Ironclad Dominion; (b) statutory damages in the alternative under 17 U.S.C. § 504(c); and (c) an award of reasonable attorney's fees and costs under 17 U.S.C. § 505.
D. Redstone's Answer
Redstone's Answer to the Complaint was filed on April 22, 2024, within the time permitted under Rule 12(a) of the Federal Rules of Civil Procedure. The Answer denies that the challenged visual assets in Ironclad Dominion are substantially similar to corresponding assets in Shardfall Chronicles and denies that any copying occurred. The Answer asserts the following affirmative defenses:
1. Fair use under 17 U.S.C. § 107;
2. Independent creation, on the ground that the challenged assets were independently created by Redstone's creative team without reference to or copying from Shardfall Chronicles;
3. Scènes à faire / merger doctrine, on the ground that the challenged visual elements are unprotectable genre conventions; and
4. Failure to state a claim upon which relief can be granted, to the extent that Luminos's allegations of substantial similarity are legally insufficient.
The Answer preserves all other defenses and objections available under the Federal Rules. This memorandum provides the detailed analysis and evidentiary foundation for the three principal affirmative defenses asserted in the Answer.
III. Defense Pillar One: Independent Creation
A. Legal Framework
Copyright infringement requires proof of two elements: (i) ownership of a valid copyright and (ii) copying of constituent elements of the work that are protectable. Feist Publ'ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 361 (1991). Because direct evidence of copying is rarely available, a plaintiff may establish copying circumstantially by demonstrating that the defendant had access to the copyrighted work and that the accused work is substantially similar to the copyrighted work. Arnstein v. Porter, 154 F.2d 464, 468 (2d Cir. 1946); Three Boys Music Corp. v. Bolton, 212 F.3d 477, 481 (9th Cir. 2000).
Independent creation is a complete defense to copyright infringement. Unlike patent law, copyright law does not prohibit independent creation of a similar or even identical work. If the defendant created the accused work independently — without copying from the plaintiff's work — there is no infringement regardless of any similarity between the works. Sheldon v. Metro-Goldwyn Pictures Corp., 81 F.2d 49, 54 (2d Cir. 1936) (L. Hand, J.) ("[I]f by some magic a man who had never known it were to compose anew Keats's Ode on a Grecian Urn, he would be an 'author,' and, if he copyrighted it, others might not copy that poem, though they might of course copy Keats's."); Selle v. Gibb, 741 F.2d 896, 901 (7th Cir. 1984). The burden of proving copying rests with the plaintiff; the defendant need only raise sufficient evidence of independent creation to create a genuine dispute of material fact on the copying element.
In the Ninth Circuit — which encompasses the District of Nevada — the independent-creation defense is well-established. Rentmeester v. Sterling Reach Partners LLC, 883 F.3d 1111, 1117 (9th Cir. 2018) (emphasizing the distinction between similarity attributable to copying and similarity attributable to independent creation or common influences). Where a defendant can demonstrate through contemporaneous documentation that the accused work was created before the plaintiff's work was publicly available, the defense is particularly compelling because it negates both the access and the copying elements simultaneously.
B. The Evidence of Independent Creation
The evidentiary foundation for the independent-creation defense is unusually strong in this case. The critical facts are as follows:
Timeline. Development of Ironclad Dominion commenced in the first quarter of 2020, approximately January 2020. Redstone's "ironclad-main" Git repository — the primary version-control system used for all development of the game — contains 14,208 commits spanning from February 12, 2020 through October 2022. The first commit in the repository is dated February 12, 2020. Shardfall Chronicles was not released to the public until March 22, 2021 — more than thirteen (13) months after development of Ironclad Dominion commenced and after thousands of commits had already been made to the repository.
This timeline is of decisive importance. The character silhouettes and environmental texture concepts that Luminos now challenges were among the earliest elements developed for Ironclad Dominion. The concept art archives maintained by Redstone's creative development team, together with the version-control history in the ironclad-main repository, document the iterative design process through which these assets were created, refined, and finalized. The earliest concept sketches for the armored character designs predate Shardfall Chronicles' release by many months. Similarly, the environmental crystal textures — which in Ironclad Dominion are rendered within a mechanized-steampunk aesthetic markedly different from Shardfall Chronicles' dark-fantasy treatment — were developed from internal concept briefs and mood boards that drew exclusively on public-domain reference materials and the creative vision of Redstone's design team.
Key Witnesses. Two Redstone employees are positioned to provide testimony that directly supports the independent-creation defense:
Jordan Kessler, Vice President of Creative Development. Mr. Kessler oversaw the entire development pipeline for Ironclad Dominion from inception through release. He can testify to the origins of the game's creative vision, the independence of the design process from any third-party works, and the internal review and approval procedures through which all visual assets were developed. Mr. Kessler's testimony will establish the chain of creative custody for the challenged assets and will demonstrate that the design team operated from original concept briefs without reference to Shardfall Chronicles.
Seo-Yeon Park, Lead Character Artist. Ms. Park was principally responsible for designing the character armor assets that Luminos has challenged. She can testify to the original creation of these assets from internal concept briefs, the iterative design process reflected in the version-control history, and the specific influences and references (none of which included Shardfall Chronicles) that informed her creative decisions. Ms. Park's personal files, including digital sketches, reference boards, and design notes, provide contemporaneous documentation of the independent creative process.
C. Metadata Verification — Recommendation to Retain Brindoval Forensic Consulting LLC
While the independent-creation evidence is strong on its face, we must ensure that it is presented in a form that is forensically authenticated and admissible at summary judgment and trial. The integrity of the Git repository timestamps and version-control logs is the linchpin of this defense. If Luminos's counsel challenges the authenticity of the development records — arguing, for example, that commits were backdated or that the repository was altered — we must be prepared with expert testimony establishing that the metadata is genuine and unmodified.
To make the independent-creation defense bulletproof, we recommend retaining Brindoval Forensic Consulting LLC to perform a comprehensive metadata analysis of Redstone's art pipeline and version-control logs. Brindoval's principal office is located at 3310 Wilshire Boulevard, Suite 700, Los Angeles, California 90010. The lead consultant for this engagement would be Nathan Rourke, who has extensive experience in digital forensics for intellectual property litigation, including metadata authentication for software and digital media development environments.
The scope of Brindoval's proposed engagement would encompass the following:
(a) Metadata analysis of the ironclad-main Git repository, including verification of the integrity and authenticity of all 14,208 commits spanning February 2020 through October 2022;
(b) Examination of hash chains, server-side logs, and backup records to confirm that commit timestamps have not been altered or fabricated;
(c) Comparison of asset provenance by tracing individual visual assets from their first appearance in the repository through subsequent revisions, establishing a complete chain of creation and modification for each of the 37 challenged assets; and
(d) Preparation of a forensic report suitable for use as expert testimony and as a supporting exhibit for summary judgment briefing.
Brindoval's analysis will serve as the evidentiary foundation for authenticating the development timeline and will provide the basis for a declaration by Nathan Rourke attesting to the integrity of the repository records. This forensic verification is essential because Luminos will almost certainly challenge the reliability of the timestamp evidence, and the Court will require more than self-serving testimony from Redstone's own employees to credit the development timeline at summary judgment.
D. Access Question
We anticipate that Luminos will argue that, even if development of Ironclad Dominion commenced before Shardfall Chronicles was released, Redstone personnel had access to Shardfall Chronicles after its March 22, 2021 release. Because Ironclad Dominion was not released until November 14, 2022, there were approximately nineteen (19) months during which Redstone's development team could theoretically have accessed Shardfall Chronicles and incorporated visual elements from it into Ironclad Dominion.
This argument, however, faces significant evidentiary obstacles. For those challenged assets whose creation dates in the Git repository predate Shardfall Chronicles' release — which we expect to include the majority of the 37 challenged assets — the access argument is irrelevant because the assets were created before the plaintiff's work was publicly available. No amount of access to a work that did not yet exist can establish copying.
For any assets that were created or modified after March 22, 2021, we will need to demonstrate one or both of the following: (a) that the modifications were unrelated to the visual elements challenged by Luminos (e.g., modifications to rendering performance, texture resolution, or lighting effects that did not alter the underlying design), or (b) that any similarity between the modified assets and Shardfall Chronicles' assets is attributable to generic genre conventions that are independently unprotectable under the scènes à faire doctrine (discussed in Section IV below). Brindoval's metadata analysis will be critical in identifying and cataloging any post-March 2021 modifications to the challenged assets and in establishing the nature and scope of those modifications.
Additionally, we should explore during discovery whether any Redstone development personnel actually played, purchased, or otherwise accessed Shardfall Chronicles during the development period. Preliminary inquiries with Jordan Kessler and Seo-Yeon Park indicate that neither was aware of Shardfall Chronicles during the development of Ironclad Dominion, although we must confirm this through more detailed investigation and prepare for the possibility that other members of the development team may have encountered the game.
IV. Defense Pillar Two: Scènes à Faire / Merger Doctrine
A. Legal Framework
Under the scènes à faire doctrine, elements of a work that are standard, stock, or common to a particular topic, genre, or subject matter are not protectable by copyright. The doctrine recognizes that certain expressive choices are so closely associated with the treatment of a particular idea, theme, or setting that granting copyright protection to them would effectively grant a monopoly over the underlying idea itself — a result that copyright law forbids. Cain v. Universal Pictures Co., 47 F. Supp. 1013, 1017 (S.D. Cal. 1942); Satava v. Lowry, 323 F.3d 805, 810 (9th Cir. 2003) ("Elements of expression that necessarily follow from an idea, or instructions, stock or standard elements — are likewise not copyrightable.").
The related merger doctrine holds that when an idea can be expressed in only a limited number of ways, the expression is said to "merge" with the idea, and the expression is not protectable. Morrissey v. Greaves Group, 379 F.2d 675, 678–79 (1st Cir. 1967); Ets-Hokin v. Skyy Spirits, Inc., 225 F.3d 1068, 1082 (9th Cir. 2000). The practical effect of both doctrines is to narrow the scope of copyright protection for works that operate within established genres, conventions, or functional constraints, ensuring that commonplace elements remain available for all creators to use.
These doctrines have particular force in the context of video game visual design. Courts have recognized that certain visual conventions are inherent to particular game genres and are not subject to copyright protection. In the fantasy-RPG genre specifically, visual tropes such as medieval armor, crystalline environments, mystical landscapes, and standardized UI paradigms are the common vocabulary of the genre. To grant any single developer a monopoly over these elements would impoverish the genre itself and would extend copyright protection beyond expression to ideas — a result that is inconsistent with the foundational principles of copyright law. See Capcom Co. v. MKR Grp., Inc., No. C 08-0904, 2008 WL 4661479 (N.D. Cal. Oct. 20, 2008); Tetris Holding, LLC v. Xio Interactive, Inc., 863 F. Supp. 2d 394, 411 (D.N.J. 2012) (distinguishing protectable expression from unprotectable game mechanics and genre conventions).
B. Application to the 37 Challenged Assets
Each of the four categories of challenged assets consists overwhelmingly, if not entirely, of visual elements that are standard genre conventions in the fantasy-RPG game category. We address each category in turn.
Crystalline Environmental Textures (9 assets). Crystalline cave textures are a ubiquitous trope in the fantasy-RPG genre. A survey of commercially released fantasy-RPG titles from the past two decades reveals that innumerable games employ glowing crystal formations, faceted surfaces, refracted-light effects, and luminescent mineral deposits in underground or magically infused environments. These visual conventions are dictated by the subject matter itself — the depiction of a fantastical underground crystalline environment admits of only a limited number of visual approaches, all of which revolve around the physical properties of crystalline structures (faceting, transparency, refraction, and luminescence). The nine environmental crystal textures challenged by Luminos fall squarely within these genre conventions and represent standard visual treatments that have been employed across the industry for years. They are not original expression protectable by copyright, but rather the unprotectable building blocks of a well-established visual genre.
Radial Menu UI Elements (8 UI icon sets). The radial menu is a widely adopted user-interface pattern in gaming, employed across dozens of RPG, action-RPG, real-time strategy, and tactical titles. Its prevalence is driven by functional considerations: the radial menu is an efficient navigation paradigm for controller-based and mouse-based input, allowing players to select from multiple options arranged in a circular layout without traversing nested menus. Luminos's particular radial-menu implementation reflects standard design choices that are dictated by these functional constraints and by genre convention. The use of segmented wedges, iconographic representations of abilities or inventory items, and a central activation point are inherent to the radial-menu paradigm and are not original to Shardfall Chronicles. Under the merger doctrine, these functional design choices merge with the underlying idea of a radial selection interface and are not protectable.
Medieval Plate-Armor Silhouettes (12 character armor designs). Armored warrior characters wearing plate armor in a dark-fantasy or mechanized-fantasy setting represent classic genre conventions that have been the visual vocabulary of fantasy gaming since the genre's inception. The visual elements of plate armor — pauldrons, greaves, gauntlets, cuirasses, and visored helms — are drawn from historical armor designs and are standard fixtures in virtually every fantasy-RPG title. While Shardfall Chronicles and Ironclad Dominion both feature armored characters, the specific treatments are markedly different: Shardfall Chronicles employs a high-fantasy, organic-fantasy aesthetic with ornamental filigree and mystical embellishments, while Ironclad Dominion uses a mechanized-steampunk design language with riveted plates, mechanical joints, and industrial-era detailing. The underlying silhouettes — broad-shouldered warriors in plate armor — are genre conventions that no single creator can claim to own.
Background Matte Paintings (8 assets). Dark-fantasy landscape vistas featuring mountainous terrain, foreboding skies, ruined structures, and atmospheric lighting effects are stock imagery in the fantasy-RPG genre. These compositions are the visual equivalent of "a dark and stormy night" — they are the environmental backdrop that players and creators alike expect in a game set in a dark-fantasy world. The eight matte paintings challenged by Luminos employ compositional elements (distant mountain ranges, crumbling castles, dramatic cloud formations, rim-lit silhouettes) that are standard across the genre and are not original to Shardfall Chronicles. Moreover, both games draw on the same well of art-historical influences — Romantic-era landscape painting, concept art from tabletop fantasy role-playing games, and the established visual language of fantasy cinema and illustration — making any similarity a product of common inspiration rather than copying.
C. Evidentiary Support
To support the scènes à faire defense, we will compile a comprehensive visual compendium of third-party fantasy-RPG games that employ the same genre conventions at issue in this case. This compendium will present side-by-side comparisons of crystalline cave environments, radial menu interfaces, plate-armor character designs, and dark-fantasy landscape compositions drawn from commercially released titles spanning at least the last fifteen years. The purpose of this compendium is to demonstrate that the challenged visual elements predate both Shardfall Chronicles and Ironclad Dominion and are pervasive throughout the genre, thereby negating any inference that Redstone's use of these elements was derived from Luminos's work.
We have identified a preliminary list of at least thirty (30) commercially released fantasy-RPG titles that employ one or more of the challenged visual conventions. This list will be refined and expanded during the discovery process and will serve as a foundation for expert testimony.
Expert testimony from Dr. Ingrid Lautner (discussed in detail in Section VII below) will address the prevalence of these motifs in the fantasy-RPG genre, the historical development of these visual conventions, and the limited range of expressive choices available to designers working within the genre. Dr. Lautner's expertise in digital media and game design uniquely positions her to provide authoritative testimony on these issues and to educate the Court on the visual vocabulary that is common to the genre and unprotectable under copyright law.
V. Defense Pillar Three: Fair Use Under 17 U.S.C. § 107
A. Legal Framework
Section 107 of the Copyright Act codifies the defense of fair use, providing that "the fair use of a copyrighted work . . . for purposes such as criticism, comment, news reporting, teaching . . . scholarship, or research, is not an infringement of copyright." 17 U.S.C. § 107. The statute identifies four non-exclusive factors to be considered in determining whether a particular use constitutes fair use:
(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;
(2) the nature of the copyrighted work;
(3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and
(4) the effect of the use upon the potential market for or value of the copyrighted work.
17 U.S.C. § 107. The Supreme Court has emphasized that fair use analysis is "not to be simplified with bright-line rules" but requires "case-by-case analysis" and a "sensitive balancing of interests." Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 577–78 (1994). In its landmark decision in Andy Warhol Foundation for the Visual Arts, Inc. v. Goldsmith, 598 U.S. 508 (2023), the Court clarified the transformativeness inquiry under Factor 1, holding that the critical question is whether the new work has a sufficiently distinct purpose or character from the original — not merely whether it adds new expression, meaning, or message. The Court emphasized that when the use is commercial and shares a substantially similar purpose with the original, the first factor is less likely to favor fair use.
Importantly, fair use is a mixed question of law and fact, and courts have resolved the issue on summary judgment when the material facts are undisputed and the four-factor analysis leads to a clear conclusion. See, e.g., Bill Graham Archives v. Dorling Kindersley Ltd., 448 F.3d 605, 612 (2d Cir. 2006); Swatch Grp. Mgmt. Servs. Ltd. v. Crowne Albany Systems, 756 F.3d 73, 82 (2d Cir. 2014). We believe the facts of this case, once fully developed through discovery and expert analysis, will support a summary judgment ruling in Redstone's favor on fair-use grounds.
B. Factor 1: Purpose and Character of the Use
The first factor — the purpose and character of the use — is widely regarded as the most significant of the four statutory factors. Under Campbell and its progeny, the central inquiry is whether the new work is "transformative" — that is, whether it "adds something new, with a further purpose or different character, altering the first with new expression, meaning, or message." 510 U.S. at 579. Following Warhol, we must also assess whether the use serves a "fundamentally different and new" purpose from the original. 598 U.S. at 533.
Ironclad Dominion is a highly transformative work when measured against Shardfall Chronicles. The two games differ fundamentally in genre execution, aesthetic identity, gameplay structure, narrative framework, and target audience:
• Aesthetic Identity. While Shardfall Chronicles employs a dark-fantasy, high-fantasy aesthetic — characterized by organic forms, mystical ornamentation, and a muted natural color palette — Ironclad Dominion repurposes and transforms generic fantasy motifs into a mechanized-steampunk context. The visual language of Ironclad Dominion is defined by industrial materials (riveted iron, brass gears, steam vents), mechanical engineering references, and an aesthetic vocabulary that is fundamentally distinct from the organic-fantasy treatment in Shardfall Chronicles.
• Gameplay Structure. Shardfall Chronicles is a single-player indie action-RPG with a linear narrative progression and real-time combat mechanics. Ironclad Dominion is a AAA multiplayer tactical RPG featuring squad-based strategic gameplay, a persistent multiplayer world, competitive ranked modes, and a fundamentally different gameplay loop centered on team coordination, resource management, and tactical positioning.
• Narrative Framework. The narrative content of the two games is entirely distinct. Shardfall Chronicles is set in a traditional high-fantasy world of ancient magic and elemental conflict. Ironclad Dominion is set in a post-industrial world where advanced steam-powered technology has displaced traditional magic, and the narrative explores themes of industrialization, class conflict, and technological hubris.
• Target Audience and Market Position. Shardfall Chronicles is a niche indie title targeting players of single-player narrative RPGs, priced at $24.99 and available exclusively on PC. Ironclad Dominion is a AAA multiplayer title targeting competitive and cooperative multiplayer gamers, priced at a premium price point and available on PC and major console platforms.
Even to the extent any individual visual elements bear some resemblance between the two games — which we anticipate expert analysis will show to be minimal — those elements have been adapted into a fundamentally different aesthetic and functional context in Ironclad Dominion. A crystalline texture rendered within a steampunk-industrial environment, illuminated by gaslight and surrounded by iron machinery, serves a fundamentally different visual and narrative purpose than the same general motif rendered within a traditional fantasy-cave setting suffused with magical light. Similarly, plate-armor designs rendered with mechanical joints, steam vents, and industrial riveting serve a different expressive purpose than plate-armor designs rendered with mystical filigree and organic ornamentation.
We acknowledge that the commercial nature of Ironclad Dominion is a factor that weighs against fair use under the first-factor analysis. However, both Campbell and subsequent case law make clear that commercial use does not preclude fair use and that the transformativeness of the use is the dispositive inquiry. Campbell, 510 U.S. at 584 ("[T]he more transformative the new work, the less will be the significance of other factors, like commercialism, that may weigh against a finding of fair use."). Given the fundamental differences in aesthetic, gameplay, narrative, and market position between the two games, we assess that Factor 1 weighs strongly in Redstone's favor as a highly transformative use.
C. Factor 2: Nature of the Copyrighted Work
The second fair-use factor considers the nature of the copyrighted work. Creative, imaginative works — such as novels, films, and video games — generally receive broader copyright protection than factual or functional works. See Campbell, 510 U.S. at 586; Harper & Row, Publishers, Inc. v. Nation Enters., 471 U.S. 539, 563 (1985). Because Shardfall Chronicles is a creative, expressive work involving original artistic choices in character design, environmental art, and user-interface presentation, this factor typically weighs in favor of the copyright holder.
However, the Supreme Court has observed that the significance of this factor is diminished when the use is transformative. Campbell, 510 U.S. at 586 (noting that "this factor typically has not been terribly significant in the overall fair use balancing"). Where, as here, the accused work transforms the purpose and character of the original, the creative nature of the original work does not preclude a fair-use finding.
Assessment: Factor 2 weighs slightly in Luminos's favor, but its significance is reduced in light of the transformative nature of Redstone's use, as discussed under Factor 1.
D. Factor 3: Amount and Substantiality of the Portion Used
The third factor examines both the quantitative and qualitative significance of the portion of the copyrighted work that was used in relation to the copyrighted work as a whole. Campbell, 510 U.S. at 586–87. This factor considers not only how much of the original was used, but whether the portion used constitutes the "heart" of the work. Harper & Row, 471 U.S. at 564–65.
Of the thirty-seven (37) assets challenged by Luminos, our preliminary analysis — which is pending confirmation by Dr. Lautner's expert visual-comparison study — suggests that the vast majority involve generic genre elements with low levels of actual visual similarity when subjected to rigorous side-by-side comparison. The visual similarities alleged by Luminos appear to be driven primarily by shared genre conventions (crystalline textures, plate-armor silhouettes, radial menus, dark-fantasy landscapes) rather than by specific expressive choices unique to Shardfall Chronicles.
We anticipate that Dr. Lautner's pixel-level comparison analysis will demonstrate that most of the challenged assets fall well below meaningful similarity thresholds when controlling for genre-standard elements. The analysis will isolate the protectable expression in each Shardfall Chronicles asset — setting aside unprotectable scènes à faire elements — and compare only the protectable expression to the corresponding Ironclad Dominion asset. We expect this filtered comparison to reveal that the actual overlap in protectable expression is de minimis.
Moreover, the thirty-seven challenged assets represent a small fraction of each game's total visual content. Ironclad Dominion contains thousands of distinct visual assets — character models, environmental textures, UI elements, cinematic sequences, particle effects, lighting configurations, and matte paintings. The thirty-seven challenged assets constitute a de minimis portion of the game's total visual library. Similarly, even within Shardfall Chronicles, the thirty-seven allegedly infringed assets are a subset of the game's total content. The quantitative overlap, measured against the totality of either work, is minimal.
Even if some degree of similarity is found to exist with respect to individual assets, the quantitative and qualitative overlap relative to each work's totality is expected to be minimal and insufficient to support an inference that Redstone appropriated the "heart" of Shardfall Chronicles.
Assessment: Factor 3 is expected to weigh in Redstone's favor, pending confirmation from expert analysis.
E. Factor 4: Effect of the Use on the Market
The fourth factor considers "the effect of the use upon the potential market for or value of the copyrighted work." 17 U.S.C. § 107(4). This factor requires examination of both the actual market harm caused by the accused use and the potential for market harm if the use were to become widespread. Campbell, 510 U.S. at 590; Harper & Row, 471 U.S. at 568.
The evidence available to date strongly suggests that Ironclad Dominion has not caused, and is not likely to cause, any harm to the market for Shardfall Chronicles. The two games serve non-overlapping market segments:
• Ironclad Dominion is a AAA multiplayer tactical RPG retailing at a premium price point, available on PC and major console platforms, and targeting competitive and cooperative multiplayer gamers.
• Shardfall Chronicles is a single-player indie action-RPG priced at $24.99, available exclusively on PC, and targeting players of narrative single-player RPGs.
The differences in price point, platform availability, gameplay type, and target audience mean that the two games are not market substitutes. A consumer seeking a multiplayer tactical RPG experience would not typically view a single-player indie action-RPG as a comparable alternative, and vice versa. The products do not compete for the same consumer dollars.
Critically, preliminary data suggests that Shardfall Chronicles' unit sales actually increased following Ironclad Dominion's release in November 2022. If confirmed, this fact would directly negate any theory of market harm. It is not uncommon for an indie title to experience a "halo effect" or increased visibility when a larger-budget title in a related genre generates broader consumer interest in the genre category. We will need to obtain detailed sales data from Luminos during discovery to verify and quantify this trend.
To formalize our market-effect analysis and prepare a rebuttal to Luminos's damages theory, we recommend retaining Evergreen Valuation Group LLC (55 West Monroe Street, Suite 2300, Chicago, Illinois 60603; lead analyst Dr. Sandra Chu) to prepare a rebuttal damages report. This report will quantify Luminos's alleged lost profits (or lack thereof), analyze the non-overlapping market segments served by the two games, and demonstrate the absence of a causal nexus between Ironclad Dominion's release and any harm to Shardfall Chronicles' market performance.
Assessment: Factor 4 is expected to weigh in Redstone's favor, pending confirmation from detailed sales data and the Evergreen Valuation Group's analysis.
F. Overall Fair Use Assessment
In sum, three of the four statutory factors are expected to favor Redstone. Only Factor 2 — the nature of the copyrighted work — is likely to weigh slightly in Luminos's favor, and the Supreme Court has repeatedly noted that this factor carries reduced significance when the use is transformative. The balance of the factors points strongly toward a fair-use finding.
Fair use presents a strong basis for a dispositive motion. We recommend filing a Motion for Summary Judgment on fair-use grounds following the completion of fact and expert discovery. The motion will be supported by expert declarations and reports from Dr. Lautner (visual comparison), Nathan Rourke of Brindoval (metadata authentication), and Dr. Sandra Chu of Evergreen Valuation Group (market analysis and damages rebuttal), as well as fact witness declarations from Jordan Kessler and Seo-Yeon Park. If the Court grants summary judgment on fair use, the remaining defenses (independent creation, scènes à faire) become moot. If the Court denies summary judgment on fair use, these alternative defenses provide robust fallback positions for trial.
VI. Rebuttal of Luminos's Damages Theory
A. Luminos's Apportioned Profits Model
Luminos claims actual damages of $28,500,000, derived from Ironclad Dominion's first-year revenue of $312,000,000 multiplied by 9.13% — the percentage that Luminos contends represents the proportion of Ironclad Dominion's commercial appeal attributable to the thirty-seven challenged visual assets. This apportioned profits model is set forth in the Complaint without any supporting methodology, economic analysis, or expert opinion.
The 9.13% apportionment figure is unsupported and conclusory. Luminos has not articulated any credible methodology for isolating the commercial contribution of thirty-seven visual assets from among the thousands of assets, gameplay mechanics, narrative content, multiplayer features, marketing efforts, brand recognition, and other factors that collectively drive Ironclad Dominion's commercial performance. A AAA multiplayer game's revenue is the product of an extraordinarily complex interplay of factors — gameplay quality, multiplayer matchmaking, post-launch content updates, marketing campaigns, brand equity, critical reviews, streamer and influencer coverage, platform distribution deals, and countless other variables. To attribute 9.13% of the game's revenue to thirty-seven visual assets — without any consumer survey data, conjoint analysis, hedonic regression, or other accepted economic methodology — is arbitrary and should not survive scrutiny.
Under the copyright damages framework, a plaintiff seeking the infringer's profits under 17 U.S.C. § 504(b) bears the burden of presenting proof of the infringer's gross revenue, and the infringer bears the burden of proving deductible expenses and the elements of profit attributable to factors other than the copyrighted work. However, the plaintiff must first establish a sufficient nexus between the infringement and the revenue stream claimed. See Sheldon v. Metro-Goldwyn Pictures Corp., 309 U.S. 390, 408 (1940). The 9.13% figure, standing alone, does not satisfy this burden.
B. Rebuttal Strategy
Our strategy for rebutting Luminos's damages theory proceeds on multiple fronts:
Challenge the apportionment methodology. We will challenge the 9.13% apportionment figure as arbitrary and lacking any empirical foundation. In discovery, we will request the factual basis and methodology underlying this figure through interrogatories and, if an expert report is produced, through expert depositions. We anticipate that Luminos will be unable to defend the figure with accepted economic methodology, and we will seek to exclude it under Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993), and Federal Rule of Evidence 702.
Argue the correct measure of damages. To the extent any infringement is found, we will argue that the appropriate measure of damages is Luminos's actual lost profits — not an arbitrary apportionment of Redstone's revenue. Actual lost profits require Luminos to demonstrate a causal link between the alleged infringement and the diversion of sales from Shardfall Chronicles to Ironclad Dominion. As discussed under Factor 4 of the fair-use analysis, no such causal link exists: the products occupy non-overlapping market segments, and Shardfall Chronicles' sales increased (expected to show an approximately 18% increase) following Ironclad Dominion's release.
Evergreen Valuation Group's rebuttal report. The rebuttal report prepared by Evergreen Valuation Group LLC will be critical to establishing these points. Dr. Sandra Chu's analysis will: (a) quantify Luminos's actual sales trajectory before and after Ironclad Dominion's release, demonstrating the absence of any sales decline attributable to Redstone's game; (b) analyze the non-overlapping consumer demographics and purchase patterns for the two games; (c) apply accepted economic methodologies (conjoint analysis, hedonic pricing models, or "but for" analysis) to demonstrate that the thirty-seven challenged visual assets had no measurable impact on Ironclad Dominion's commercial performance; and (d) critique Luminos's 9.13% apportionment figure on methodological grounds.
Financial discovery. Luminos's financial statements were prepared by Whitmore & Pine CPAs, located at 6700 Manchaca Road, Suite 210, Austin, Texas 78745. We should request these financial statements during discovery, together with detailed unit-sales data for Shardfall Chronicles broken down by month and platform, to analyze Luminos's actual financial condition and revenue trends. This data will be essential for the Evergreen Valuation Group's analysis and for our damages rebuttal generally.
C. Statutory Damages Alternative
Luminos asserts statutory damages in the alternative under 17 U.S.C. § 504(c). Under this provision, a copyright owner may elect to recover statutory damages in lieu of actual damages and profits, in an amount of not less than $750 and not more than $30,000 per work infringed, as the court considers just. For willful infringement, the court may increase the award to not more than $150,000 per work infringed. 17 U.S.C. § 504(c)(2).
If the Court finds fair use or independent creation, statutory damages — like all other remedies — are moot, because there is no underlying infringement to compensate. However, in the event that the case proceeds past dispositive motions on the merits of the infringement claim, we should be prepared to argue against a finding of willfulness in the alternative. The independent-creation evidence, the scènes à faire analysis, and the good-faith nature of Redstone's creative process all militate strongly against any finding of willful infringement. Redstone's development team created Ironclad Dominion through an original, well-documented creative process, and there is no evidence of intentional copying. We will also argue that the number of "works" infringed, for purposes of statutory damages calculation, should be construed narrowly — individual visual assets within a single registered audiovisual work do not constitute separate "works" for statutory-damages purposes.
VII. Expert Witness and Consultant Recommendations
A. Dr. Ingrid Lautner — Visual Comparison Expert
Title: Professor of Digital Media and Game Design, Pacific Western University
Specialty: Visual asset comparison, procedural generation, transformative design methodologies, and the history and conventions of digital game visual design
Proposed Engagement: Dr. Lautner will be engaged to perform a pixel-level visual comparison of all thirty-seven (37) challenged assets, comparing each accused asset in Ironclad Dominion to the corresponding asset identified in Shardfall Chronicles. Her analysis will employ accepted methodologies for visual comparison, including filtered analysis that separates protectable expression from unprotectable scènes à faire elements. She will also prepare an analysis of genre conventions and scènes à faire elements in fantasy-RPG visual design, drawing on her extensive knowledge of the genre's visual history and established conventions. Dr. Lautner will prepare a written expert report pursuant to Federal Rule of Civil Procedure 26(a)(2)(B) and will be available to provide testimony at deposition and trial.
Fee: $650 per hour
Rationale: Dr. Lautner's expertise in both digital media design and comparative visual analysis makes her ideally suited to serve dual functions in this case. First, she will conduct the rigorous similarity comparison that will underpin our Factor 3 analysis under the fair-use defense, providing objective, expert-level assessment of the degree of actual visual similarity between the challenged assets. Second, she will testify to the genre-standard nature of the challenged visual elements, supporting our scènes à faire defense by demonstrating that the visual conventions at issue are pervasive throughout the fantasy-RPG genre and are not original to Shardfall Chronicles.
We anticipate that Luminos will retain its own visual-design or digital-forensics expert to present a competing analysis of the challenged assets. Based on Hargrove, Tanaka & Whitmore's prior engagements and the nature of the claims, we believe there is a reasonable probability that Luminos will retain Dr. Calvin Yates, an independent digital forensics consultant and former associate professor at the Riverbend Institute of Technology. Dr. Yates specializes in pixel-level comparison and asset metadata forensics, and has published in the area of digital visual similarity metrics. We should anticipate a well-prepared opposing expert report and prepare Dr. Lautner to address and rebut Dr. Yates's methodology and conclusions.
B. Brindoval Forensic Consulting LLC — Metadata Verification
Office: 3310 Wilshire Boulevard, Suite 700, Los Angeles, California 90010
Lead Consultant: Nathan Rourke
Proposed Engagement: Brindoval will be engaged to perform a comprehensive metadata analysis of Redstone's art pipeline and version-control logs from the ironclad-main Git repository. The scope of the engagement includes: verification of the integrity and authenticity of all 14,208 commits spanning February 2020 through October 2022; examination of hash chains, server-side logs, and backup records; comparison of asset provenance and chain of creation for each of the thirty-seven challenged assets; and preparation of a forensic report suitable for use as expert testimony and summary judgment evidence.
Rationale: The independent-creation defense depends entirely on the authenticated development timeline documented in the Git repository. Brindoval's forensic verification will ensure that the repository evidence is admissible under the Federal Rules of Evidence and is unimpeachable in the face of any challenge by Luminos's counsel to the integrity of the timestamp data. Nathan Rourke's forensic report will also serve as the basis for a declaration to be submitted in support of Redstone's Motion for Summary Judgment.
C. Evergreen Valuation Group LLC — Damages Rebuttal
Office: 55 West Monroe Street, Suite 2300, Chicago, Illinois 60603
Lead Analyst: Dr. Sandra Chu
Proposed Engagement: Evergreen Valuation Group will be engaged to prepare a rebuttal damages report addressing Luminos's $28.5 million damages claim. The report will quantify Luminos's alleged lost profits (or demonstrate the absence thereof), analyze the non-overlapping market segments served by Ironclad Dominion and Shardfall Chronicles, demonstrate the absence of a causal nexus between Ironclad Dominion's release and any harm to Shardfall Chronicles' market performance, and critique the methodology underlying Luminos's 9.13% apportionment figure.
Rationale: The Evergreen Valuation Group's analysis is essential for two purposes: (1) supporting the Factor 4 fair-use analysis by providing empirical evidence of the absence of market harm, and (2) rebutting Luminos's $28.5 million actual-damages claim by demonstrating the flaws in the apportioned profits model and the absence of any causal nexus between the alleged infringement and Luminos's financial performance.
VIII. Insurance Coverage
Redstone maintains a media and entertainment liability insurance policy with Pinnacle Mutual Insurance Co. (200 Commerce Drive, Hartford, Connecticut 06103), bearing Policy Number PML-IP-2023-08841. The policy includes an intellectual property litigation sub-limit of $15,000,000 per occurrence, with a deductible of $5,000 per claim. Based on our preliminary review of the policy terms, the claims asserted in this action — copyright infringement arising from the development and commercial distribution of a video game — fall within the scope of the policy's coverage grant, subject to any applicable exclusions that should be reviewed in detail by our insurance coverage group.
A coverage tender letter should be sent promptly to Franklin Teague, Claims Adjuster, at Pinnacle Mutual's claims department, to place the insurer on notice of the claim and to ensure that defense costs are covered under the policy. A claim number has subsequently been assigned: PML-CLM-2024-3392. The tender letter should include a copy of the Complaint, Redstone's Answer, and a summary of the defense strategy, and should request confirmation that Pinnacle Mutual will reimburse Redstone's defense costs — including attorney's fees, expert witness fees, and litigation expenses — in accordance with the policy terms.
The total defense costs for this matter — including Calderwood & Harkness's fees, local counsel fees, expert witness fees, forensic consulting fees, and other litigation expenses — are anticipated to be well within the $15 million per-occurrence sub-limit. Based on our preliminary budget estimates, Redstone's net out-of-pocket exposure should be limited to the $5,000 deductible, assuming the insurer accepts coverage without reservation. We will monitor the insurer's coverage position throughout the litigation and will immediately advise the engagement team if any coverage issues arise.
IX. Proposed Litigation Plan and Timeline
A. Immediate Next Steps (April – May 2024)
The following actions should be undertaken immediately:
1. Expert and Consultant Retentions. Finalize engagement letters for Dr. Ingrid Lautner (visual comparison expert), Brindoval Forensic Consulting LLC (metadata verification), and Evergreen Valuation Group LLC (damages rebuttal). All three retentions are critical to the development of the evidentiary record and should be in place no later than the end of April 2024 to ensure sufficient lead time for the expert and discovery phases.
2. Insurance Coverage Tender. Send coverage tender letter to Franklin Teague, Claims Adjuster, Pinnacle Mutual Insurance Co., under Policy No. PML-IP-2023-08841, Claim No. PML-CLM-2024-3392. Include copies of the Complaint and Answer and request confirmation of coverage for defense costs.
3. Rule 26(f) Conference. Prepare for the Rule 26(f) discovery-planning conference, which is currently scheduled for May 6, 2024. During the conference, we will negotiate the scope and timing of discovery with Luminos's counsel at Hargrove, Tanaka & Whitmore LLP, including proposed deadlines for document production, interrogatories, depositions, and expert disclosures. We will seek a discovery schedule that allows sufficient time for Brindoval to complete its metadata verification before the close of fact discovery and for Dr. Lautner and Evergreen Valuation Group to prepare their expert reports during the expert phase.
4. Initial Disclosures. Prepare initial disclosures under Federal Rule of Civil Procedure 26(a)(1) for service on Luminos's counsel. Target service date: May 20, 2024. The initial disclosures will identify the following key witnesses:
• Jordan Kessler, VP of Creative Development, Redstone Gaming Corp. — knowledge of Ironclad Dominion's development process, creative pipeline, independent creation, and the absence of access to Shardfall Chronicles during the design phase;
• Seo-Yeon Park, Lead Character Artist, Redstone Gaming Corp. — knowledge of the creation and design process for the twelve challenged character armor assets, internal concept briefs, and reference materials used;
• Marcus Hale, CEO, Redstone Gaming Corp. — knowledge of corporate operations, revenue and financial performance of Ironclad Dominion, and corporate policies regarding intellectual property;
• Priya Venkatesh, General Counsel, Redstone Gaming Corp. — knowledge of intellectual property clearance