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They're distributing their changes as a patchset to the ROM, which is completely legal. As a result, they aren't distributing binary files; other hosts are.

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They are using the Mortal Kombat name and trademark which they are most definitely not licensed to do.

That's not copyright infringement, that's trademark infringement. They're two entirely separate concepts.

The logos are copyrighted.

Doesn't copyright also come with fair use clauses?

Copyright is not the same as trademarks

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