1: The simplest answer is that mods are added content. There’s probably a bit of gray area on mods that are simple balance tweaks, but when you’re looking at most modding, that’s new content (of one form or another) being added to a game.

That said, there’s no single answer to this. Modding and cheating can rely on similar tools, but the methods used vary from title to title. Some cheats would require hooking a process into a .dll, while others will require a recompiled version of the .exe. Most of the time, modding will modify database entries for the game in question, or rely on a published API. However, this is not universal. I’ve modded titles where the database was stored in plaintext .ini files, and I’ve seen games where modding required tricking the DRM to accept the modified data as legitimate.

The grayest area are, probably, the reshader mods. In these cases, you’re looking at a toolkit that hooks into the render pipeline (usually via a .dll), and mechanically is very similar to wallhack mods, which also hook into the render pipeline. In both cases you’re technically modifying what’s rendered, however the intentions, and the information provided to the player, is vastly different.

1. Yes. Again, the technical elements are relevant, but most end user cheats do require the user to run a modified version of the software. A rather crude analogy would be like taking a book, adding a few hyperlinks, and then trying to distribute it as your own. It is, in fact, copyright infringement. You can argue that you’re "adding value," but it won’t pass a scratch and sniff test. The infringement happens when the modified version of the game is being executed, because that is an unauthorized copy. Again, in crude terms, it’s a counterfeit of the original software.

Now, there is the fair use test. (Remember, fair use is an affirmative defense.) The purpose and character of the infringement, the nature of the copyrighted work, the amount of the work taken, and, the effect on the market.

These four are all taken together and weighed as a whole. Sometimes you’ll see people say, "well, it’s educational, so it should be fine," but it’s not that simple.

The purpose of the infringement is to disrupt the work for others to improve your own experience. That’s not going to fly as a fair use defense. This is where the transformative element of a defense comes into play. For example: If you’re taking a work, and parodying it, this will offer significant weight towards fair use.

The nature of the work is fiction. Really, this test is about offering additional fair use protections when you use factual data presented by someone. So, weird as it may sound, textbooks, biographies, news articles, all enjoy less copyright protections, at least when they’re truthful. Again, this is part of the entire test. Fortnite isn’t factual, so that’s not a score for this kid.

The amount of the work taken. In this case, the argument is that the entire work is being taken, and then modified at runtime. Generally, this is more interested in protecting things like, "taking screenshots," or pulling a quote from a book. Pulling lots of quotes, on the other hand, to the point that you’re transcribing entire chunks of text, can cross the line.

Finally, the effect on the market usually works from the assumption that the infringing product will be replacing the copyrighted work in the market. However, because of how the test is written, actively interfering with the original work (for example, by producing a product that devalues the original.) So, those twitter accounts that "fight clickbait" would probably be infringing, at least on this element of the test, simply because they reduce the need for someone to click through.

In the case of cheats, Epic needs to be able to show that the proliferation of cheat tools affected their bottom line. Something that gets easier every time someone in these threads says that they’re too "lazy" or "incompetent" to fix things on their own.

It’s an unusual situation, and there is a valid argument that copyright isn’t the correct tool for these kinds of situations, but as the law is written, it is infringement.

This is distinct from the private servers cases with WoW. With those, the infringers were running code for WoW that they did not legally own (that is to say, the server side code), so that’s a little more cut and dried.

It’s also (to the best of my knowledge) not really feasible to go after end users for infringement over cheats like this. The key element is that the infringers were distributing elements of the original code to others, and while the amount taken was small, the fair use tests fail on every other count.

1. Yes, with some caveats. Terms of Service fall under contract law. To the best of my knowledge, contract law does not include any punitive damages (at least in the United States), so you can only sue for actual damages. In most circumstances, that’s going to be negligible.

For example: if you signed a ToS that prohibited you from posting any personal information on a site, but later accidentally gave your first name. You could be sued, but if there weren’t any actual damages, the suit wouldn’t be able to seek damages. However, if disclosing your name caused them to run afoul of a regulatory agency somewhere, which fined them for (let’s say) $5k, then they could sue you for that 5k.

Again, this is a little weird as situations go, because Epic is claiming that the kid caused actual damages to them via the distribution and sales of this cheat program. That said, they’re also probably high balling the number, until the kid’s lawyer tries to drag them back down to earth, (or get the suit tossed because the numbers are too speculative.)

There are legal limits to contracts, but not reading them doesn’t provide any protections. In point of fact, you should have read them, but chose not to. That is your choice, you’re welcome to do so, and if both parties feel they’re getting what they wanted from the experience, then there’s (probably) not going to be any legal fallout.

As for the house example, there’s a couple elements of contract law that can render individual clauses null.

Unconscionably can nullify a clause if it’s so absurd or unfair that it cannot be allowed to stand. Granted, being asked to hand over your house isn’t automatically an example of this, but it’s highly likely that it would be tossed because of this principle.

Misrepresentation can nullify a clause if it’s purpose was deliberately obtuse or inconsistent with negotiations. Again, it wouldn’t automatically protect your home ownership, but burying that little gem in the fine print wouldn’t mean they’d get your house without a fight.

A clause can be nullified if it’s functionally impossible (or fully impossible) to satisfy. This is why no company can claim your soul in a contract, because there’s no way to hand over an intangible concept that may, or may not, exist, depending on your philosophical outlook and spiritual convictions. Again, it won’t necessarily protect you from signing away your house, but the actual process is a bit more involved than just saying, "yeah, I’ll do that."

(Incidentally, there are a lot of other reasons a clause can be ejected from a contract, or an entire contract can be thrown out. These are just the reasons that come to mind which are relevant to your example.)

Now, here’s the sticky part. If you signed a contract which obligated you to transfer ownership of your house to a third party, of your own free will. No coercion, no duress. That is legal.

The two things that stop it are: Epic doesn’t want your house. It’s a financial headache they don’t need to deal with and aren’t set up to handle. Second, that would be monumentally bad press for them.

If there’s one takeaway here, it’s this: You probably should read the contracts you sign.

The likelihood of game developer pulling something like this is pretty low, but there are a lot of shady groups that really do make their money scamming people out of their homes, and then flipping the real estate.