If I recall that particular author was really supportive of it and then notice one persons fan fic was similar to the latest book they were writing so they informed them of that and offered them recognition or something and then the fic writer demanded co authorship and half the profit or something and threatened to sue.
Indeed thats been the stated reason as to why GRRM is against Fanfiction. Although he went a little further to imply that if you write good enough, your work even if it is a fanfiction might be looked at as genuine official material which would lead to a little legal trouble. Its in essence the argument that if two writers create a world, characters and a story, which is actually very similar then you have a problem on your hands. Prime example would perhaps be if GRRM wrote A Song of Ice and Fire and GTTM wrote A Melody of Water and Smoke, they only share superficial similarities, writing style and all, even if all the names and such are different, you could confuse one for the other and assume both are from the same author which is where the legal problem arises.
GRRM is not against all fanfiction on principle but he dislikes it for the reasons he stated. After all im sure he is aware that one bad apple doesnt mean all apples are bad. If someone were to write a sixth and seventh book and send them to George he might actually use the material provided the Ghostwriter for them garantuees him that he wouldnt persue legal action for its use, or would at least not demand half of any potential profit. Course George couldnt just claim it was his own work, hence he would have to edit and change it enough to be able to claim it was his, even if it was based on work provided by another author.
Anyhow, i doubt they would go after this Mod since it isnt exactly fanfiction or intended to make profit from it, its merely a recreation, as faithful as possible, of the world and universe that GRRM created. It wouldnt even be too suprising if GRRM sometime were to actually endorse this mod as the definitive Game of Thrones Game, or rather give Paradox the license to turn the mod into an official product with the original modders being paid for it/being invited as the core design team as has happened before, most recent example being DayZ.
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