Game publisher FormGen counter-sued, claiming that Micro Star created a derivative work based on Duke Nukem 3D and infringed their copyright.

[5] The district court granted a preliminary injunction against MicroStar, preventing them from using the screenshots from Duke Nukem 3D on their packaging, and rejecting Micro Star's argument that these images qualified as fair use.

[5] However, the district court considered the precedent from Galoob v. Nintendo, and found that Nuke It was not a derivative work and did not violate FormGen's copyright.

[7] After finding that Nuke It was indeed a derivative work based upon Duke Nukem 3D, the court went on to consider Micro Star's fair use argument.

[7] The court also rejected Micro Star's argument that FormGen abandoned all rights to their protected expression in Duke Nukem 3D, saying that this could only be done through an overt act.

[9] The court distinguished the facts in Micro Star v. FormGen from those of the Game Genie case in Galoob v. Nintendo, because the Duke Nukem 3D mods were recorded in permanent files.

[10] Attorney Ross Dannenberg also noted that the Duke Nukem maps were found to be infringing derivative works because they incorporated elements of the original game's art and story.

[10][11] Writing for the William & Mary Business Law Review in 2020, Carl Lindstrom states that "Micro Star v. Formgen's holding still remains the final word on the legal status of mods, even when created using developer-furnished tools.

[6] J. Remy Green wrote for the North Carolina Journal of Law & Technology, discussing whether awarding more rights to modders would discourage original games, or encourage more derivative works.

[16] In the Journal of Intellectual Property Law, Matthew Freedman cautioned that the case could effect the legality of machinima, where artists use copyrighted video game assets to produce animated films.

[17] Dan Burk in the University of Pennsylvania Law Review also cautioned that Microstar may apply to make esports broadcasts an infringing activity, as the copyright of each game belongs to its creators.