I've been watching this since 2000 and I'm still unaware of any ruling that addresses this, even tangentially. I have never seen the law address the act of taking content from a major company and adding in content from a third party, despite the popularity of the practice.
"They don't sue because they know they will lose basically and losing would create a precedent."
I disagree completely that they would obviously lose. I think you're applying some combination of logic and wishful thinking to a situation where neither apply. The only logical conclusion I can come to about this situation over the past nearly 25 years is that they haven't codified anything because the current murkiness suits them just fine. There has been plenty of time to push a law through Congress that reifies that you're not allowed to make any modifications, but why bother with that expense when they can pretty much harass anyone they like at any time about it right now. What third-party mod provider has the wherewithal and desire to go toe-to-toe with a multinational behemoth so they can distribute their alternate Mario Kart courses or something? A C&D shuts down any sane person now, and a DMCA report takes out the vast majority of the rest. There's not a lot of need for them to established a precedent, and establishing a court precedent on this matter has been complicated by the inability and/or disinterest of anyone on the receiving end to take this through multiple levels of court, all the while incurring personal risk if they lose and only highly socialized benefits if they win (as they will most assuredly still be deeply into the net negative both in terms of money and stress). It's easy to wish someone else would take them up to the Supreme Court and establish that it's perfectly legal to mod games, to distribute the mods, and the game companies aren't allowed to prevent it, but the list of people willing to do it themselves has been pretty short.
"They don't sue because they know they will lose basically and losing would create a precedent."
I disagree completely that they would obviously lose. I think you're applying some combination of logic and wishful thinking to a situation where neither apply. The only logical conclusion I can come to about this situation over the past nearly 25 years is that they haven't codified anything because the current murkiness suits them just fine. There has been plenty of time to push a law through Congress that reifies that you're not allowed to make any modifications, but why bother with that expense when they can pretty much harass anyone they like at any time about it right now. What third-party mod provider has the wherewithal and desire to go toe-to-toe with a multinational behemoth so they can distribute their alternate Mario Kart courses or something? A C&D shuts down any sane person now, and a DMCA report takes out the vast majority of the rest. There's not a lot of need for them to established a precedent, and establishing a court precedent on this matter has been complicated by the inability and/or disinterest of anyone on the receiving end to take this through multiple levels of court, all the while incurring personal risk if they lose and only highly socialized benefits if they win (as they will most assuredly still be deeply into the net negative both in terms of money and stress). It's easy to wish someone else would take them up to the Supreme Court and establish that it's perfectly legal to mod games, to distribute the mods, and the game companies aren't allowed to prevent it, but the list of people willing to do it themselves has been pretty short.