For anyone interested, the actual version of Daggerfall Unity is available here:

https://github.com/Interkarma/daggerfall-unity/releases/latest

Installation instructions ( in case you need them ) You could provide an archived source code as a game extra.

It wouldn't have added much value: it is quite trivial to download and install the Unity version alone.
A full package of dozens of mods on the other hand, pre-configured and optimized, is quite valuable to the average person interested but so much as to spend the amount of time necessary to produce such a build.
The implementation came way short of that though, in a typical GOG fashion, but the intention was potentially valuable; the Unity version alone, much less.

That's true for original work, mods seem to be considered derivative works though.

If anything, they more likely infringe on the original work (unless the developer explicitly granted such permission), but there's a strong case for fair use too (which by the way, may apply to individual modders but not to GOG -- as a commercial platform).
It's just mostly tolerated right now, but in any case, it's an extremely gray area, unfortunately.

That's a very confused article.

Derivative works are protected too, as long as they are sufficiently original.

Whether the derivative work infringes on the copyright of the original work is a separate question. If a modder makes a derivative work without permission, they may be infringing, but that does not mean the modder's own contributios are "free for all."

The linked article claims that mods are ineligible for copyright protections, but the linked Micro Star vs FormGen case which is supposed to justify this position does not actually address whether Micro Star's mod (or parts of thereof) is copyrighted and owned by Micro Star; it only addresses whether Micro Star infringes on FormGen's copyright. Typical low-effort corporate blogspam from someone trying to sell a service.

And legal; that's an important point.
Copyright doesn't attach to unlawful works.

Micro Star v. FormGen Inc. ruled that Micro Star infringed on FormGen's copyright by distributing the mods, but also categorized them as not-fair-use derivative works.

To the extend a given mod would be considered by a court a derivative work and not fair use, as Micro Star's, and hasn't been somehow allowed by the copyright owner of the original work, it is not lawful and therefore cannot claim any copyright on its own, however original the mod is.
The question then becomes: is it a derivative work, and if so is its distribution fair use?

That's my understanding at least, not being anything close to a copyright lawyer.

Obviously ;)
Quite the opposite actually in this case, as, even in the case where the mod as published by the original modder would be considered fair use, it most certainly wouldn't be in the case of GOG clearly commercial distribution.

I think there might be a little misunderstanding here.

The lawful works requirement refers to the derivative work as a whole. What it is saying is that if you make an illegal derivative, you do *not* get the right to copy that derivative work.

However, your own contributions to that derivative work are still protected by copyright. (As the quoted circular 14 states: copyright protection will not extend to any part of the work in which such material has been used unlawfully, but it does not say that copyright protection is void for the added parts that constitute original authorship.)

This distinction is important:

1. a modder is in many cases producing illegal derivatives which they have no right to distribute

2. however, the modder's own contributions are still protected by copyright, which means others may also not distribute the mod without the modder's permission

As a concrete example, if I make an original piece of music, it is without any doubt protected by copyright.

Now I might make a mod which uses said music as the background music on a certain level. The mod as a whole might be an illegal derivative, which means I may not distribute it (i.e. copyright does not protect my right to copy material which I had no premission to copy to begin with). However, the music (and any original levels, textures, models, etc. I made) are still without any doubt owned by me and protected by copyright. Thus, nobody else can distribute the mod either. Putting some original material I made (or someone else made and let me use) into a mod does not void copyrights on that material. This is what paladin181 means when they say "[mods] literally ALL have copyright protection unless it is explicitly waived," and this is also what I meant when I said derivative works are protected too: you (or GOG) don't get to copy it without the modder's permission.

For example: Pixelmon.
Minecraft Mod? Good, fine, dandy.
Minecraft mod using someone's trademarked items? Less good. Some companies are tolerate in the "look the other way sense".
Making money off said mod that uses trademarked or copywritten material? That's a very good way to get sued, quickly.

You're right that the original parts of a derivative work, containing otherwise unlawful (because previously copyrighted) parts, are copyrightable.
I guess the "misunderstanding" was that my previous messages seemed to imply that all parts of a derivative work containing even a small unlawful independent part would not be protected by copyright?

Anyhow, copyright still only applies to non-infringing parts of the work.
In the case of Daggerfall Unity, I guess every single part is a derivative of the original work.
For the mods that would create something we could consider original, say, a new village, quest, item, etc, I guess it'd be akin to Micro Star v. FormGen Inc. where the story would be considered an (infringing) sequel; whether each added element would be copyrightable on its own then would depend on how "intertwined" to the story, or to the copyrighted IP, it would be considered.

Yes, as long as they're entirely original (or lawful derivative works).
If the music is, for example, a reorchestration of the theme of the original copyrighted theme, it can't be copyrighted.
Most mods, but not all obviously, are likely to have few fully original elements.

Anyway, thanks for clarifying.

For anyone interested, resources I found about this very case:
* §507.2 The Scope of the Copyright in a Derivative Work
* §313.6(B) Unlawful Use of Preexisting Material in a Derivative Work, a Compilation, or a Collective Work
* SECTION 103. COMPILATIONS AND DERIVATIVE WORKS

The removed modpack was published without Interkarma's involvement. He repeatedly stated that people should not download it, as the creator (a random YouTuber) clearly disregarded his vision for the project and had no understanding of modding a Unity-based game.