If your assertion that it was fair use to use Whiterun and Ysolda were true [...]
An assertion that I didn't made. It's your interpretation that made you come to this conclusion, not my saying. You seem to not understood that all what I said is linked. You can't take part of a sentence or a paragraph and assume that this part alone is as legal as any other parts take alone. It's not how Law works, nor what I said.
What I said it that it's legal to use Whiterun
if what I said before and after these words is also present. So, here, among other things, if it's used from the game itself, not for profit, and used as parody or seen as homage by the rights owner(s).
That's how Law works, it's not an action that is judged, but the action in its context.
By example, it's not legal to cross the road outside of crosswalk. Still if you've to face justice because of this, the context will be take in count. Perhaps had you a really good reason to do so, or was there a reason to make this law irrelevant in this particular case ; it can even be both at the same time. Crossing a road, blocked because of a cycling competition, outside of the crosswalk, to give assistance to a rider who just fall is not illegal. This despite the fact that the Law say it clearly, it's illegal to cross a road outside of a crosswalk.
Which is what I was getting at with saying it isn't something that is clearly defined. Precedent helps, so if you have done your research [...]
No, and no. Once again you misunderstood how Law works. Every law is split in two parts. The letter of the law, so what is wrote, and the intend of the law, so why the law was wrote. The first one is the definition itself, and for parody it's clearly defined. The second one is the interpretation made of the law, and that's where the precedents take place. But the precedents don't change the clarity of the law, there's many that are way less clear than this one, and most of them cover way more important subjects.
The decision doesn't always fall as you expected it. Still one of the two lawyers expected this issue... else there wouldn't have be a trial at all. It's perhaps not this evident with the US judicial system, but it's what happen. If it didn't worked like this, the whole justice process would be simply useless.
To keep my previous example, you crossed the road, you were outside of the crosswalk, you'll be sentenced, point. No need to sent you to the court, no need for a judge who past his life studying Law, no need for a lawyer to defend you. It's wrote that it's illegal, it is.
Hopefully, it's not like this.
[...] otherwise it's going to be up to the judge's personal discretion as to what constitutes a transformative work.
No, no, no, no, no ! It's not up to the judge's personal discretion ! It can be your impression as simple witness of the judicial system, but no, really no. Once again, there's a trial because one of the lawyer expected this decision. This especially in the US where you are prone to financial agreement to avoid to have to face a judge. And if one lawyer expected this decision, it's because the whole process is strict and, in a way, predictable.
For case falling under the Civilian Law, what can't be (totally) predicted is the knowledge of the judge. He can be not enough aware of the concept of [whatever the main part of the case]. He can misunderstand what the expert will try to explain. He can know a precedent that the lawyer don't know. The lawyer can have missed something. That what make one of the lawyer loose, not the personal discretion of the judge.
Who do you think the victim of copyright infringement is?
Where's the copyright infringement in the fact to fuck a girl with a bottle of Coca ? Where's the copyright infringement in the fact to kill someone by stabbing him with a screwdriver ? There isn't... and that's why, like I said, the manufacturer/seller can't sue you for the use you made of its product.
