Is it legal, in the world of video game design, to take models you do not own, edit them, and then release them in a free application with credit given?
2 Answers from Attorneys
That would most likely be illegal for a handful of reasons:
1) how the original model was obtained: most software is licensed and the terms of the license may govern how you can use the software or the individual files contained in the software package. Additionally, if you break even the slightest level of encryption on the file itself you may be violating the DMCA (Digital Millennium Copyright Act).
2) how the edits are made: if you use pirated, student version, or open source software to edit the file you may be breaking more laws or even subject to further license terms of those software systems. Also, if you merely use a software package to change the file type and then edit the model in a different program you may be subject to both software licenses.
3) the character of the edits: if you do not modify the model substantially (and the level of change required would be a question for a judge or jury) you would still be infringing the copyright. Further, you may also violate the trademark if the model is particularly recognizable by consumers and being related to a specific company (not yours).
4) what use you put your new model to: if you're making money off the new model, but an "upstream" license forbids the profiting off of "derivative works" without permission then merely giving credit to the original designer without obtaining their permission will be a violation. There is a fair use exception if you meet specific criteria, but that exception is incredibly more limited by judges than Wikipedia would have you believe.
In the end, technology and Internet law are very young and unsettled. There may be a way to do what you need, but you definitely should consult and attorney or just ask the originator for permission. Most designers would be happy to collaborate on what changes they think are acceptable to separate your creativity from theirs.
No, making a "derivative work" is a copyright violation.