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No, it isn’t.
https://copyright.psu.edu/copyright-basics/fair-use/
"In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include—
the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;
the nature of the copyrighted work;
the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and
the effect of the use upon the potential market for or value of the copyrighted work."
So, me, making a fan page for FunkoPop versions of the Five Nights at Freddies characters and using their images? THAT’S fair use.
Me charging money for a fan game based on the same Funko versions of those characters is NOT fair use.
“Section 107 of the Copyright Act gives examples of purposes that are favored by fair use: “criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, [and] research.””
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Fortunately our laws aren’t about what’s moral or not. You need religious police for that.
The correct process would have been to issue a takedown request, then go after the domain if nothing was done, they just jumped the gun.
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