Installation 01 can continue to operate as long as it stays non-commercial.

When you write about the game industry for a while, you end up writing about fan game projects that have been shut down by the original publishers with depressing frequency. Everyone from Square Enix to Blizzard to Nintendo (especially Nintendo) has sent cease-and-desist letters to passionate fans over games based on the companies' popular properties. The companies often cite the need to protect their legal copyrights to characters and related works.
So it's nice when we're occasionally able to write about a fan game that actually gets some level of tacit approval from the developer of the original title. That's what is happening with Installation 01, a Halo fan-game project being built in Unity in order to recapture the classic feel of Halo 2 and Halo 3 for Windows, Mac, and Linux players. Apparently, the team behind that game has worked out an arrangement to continue development without any legal trouble from the Halo-makers at 343 Industries or its corporate parent Microsoft.

The Installation 01 team wrote in a community update this week that they have been "maintaining a level of contact with 343 Industries over the past several months," eventually culminating in a meet-and-greet to talk about details of the project and its legal status. After what the team calls an "incredibly informational and very positive" phone call, they say, "We have been ensured that Installation 01 is not under imminent legal threat, provided we remain non-commercial in nature and scope and continue to follow Microsoft’s Game Content Usage Rules to the letter."

Those Microsoft Game Content Usage Rules lay out relatively clearly what fans can and can't do when creating "derivative works" based on Microsoft-published games (the rules seem written with online video in mind, but they could also apply to fan games). In short, the Usage Rules prevent creators from earning money off the back of Microsoft's IP, from using Microsoft characters to make "offensive" content, and from using graphics and sounds from the original games directly. Also, "you can't reverse engineer our games to access the assets or otherwise do things that the games don't normally permit."

The Installation 01 developers have long said they've used those published rules to guide the game's development since beginning in 2013. They note on their About page that "all of Installation 01's assets are either created from scratch or obtained through the Unity Asset Store," though that might not provide much legal defense if those "assets" bore a strong enough resemblance to those found in Microsoft's game,

The key to 343's laissez-faire attitude seems to be the lack of any monetary reward for the project. After the talks, the team now says that it will "not be selling i01 or Halo related merchandise" and that it "will never be accepting donations." Though the Usage Rules explicitly say that "you may use the Item on a page where you ask for optional donation requests," the i01 team says it wants to "keep a respectful distance between us and Microsoft’s intellectual property." For now, that means keeping everything completely non-commercial.

The Installation 01 team is also clear that their situation doesn't mean every non-commercial Halo fan project now has the green light. Other efforts would have to be approved on a case-by-case basis by 343 and Microsoft, and the i01 team says "the 343 reps also informed us that they simply don’t have the time or bandwidth to engage with every other fan project, as much as they’d love to." (A Microsoft representative was not immediately available to respond to a request for comment from Ars.)

In any case, it's nice to know that there are still at least a few cases where game makers are willing to work with some of their most passionate fans to enable the creation of new, amateur games based on popular properties. We hope other game makers can find a way to let up on the legal reins a little and find similar arrangements with the players that are so inspired by their content.