Some things to know about TLA:
Here's the Fair Use clause of the US Copyright Law, Article 1, Section 107.
Notwithstanding the provisions of sections 106 and 106A, the fair use of a copyrighted work, including such use by reproduction in copies or phonorecords or by any other means specified by that section, for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright. In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include -
(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;
(2) the nature of the copyrighted work;
(3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and
(4) the effect of the use upon the potential market for or value of the copyrighted work. The fact that a work is unpublished shall not itself bar a finding of fair use if such finding is made upon consideration of all the above factors.
Thus the US Copyright Law protects The Last Alliance as such: (refer back to numbered criteria above)
(1) TLA is not in any way commericial, and is indubitably a nonprofit, educational project.
(2) Tolkien's Work is immensely vast and deep; therefore, it requires much research and is deserving of dedicated scholarship and it is necessary to educate willing fans based on this research to allow the works of Tolkien to be better appreciated.
(3) TLA uses all original artwork, music, essays, movies, etc, etc. But in order to research Tolkien's work to its fullest extent, and to then educate about it, it is necessary to use as much of the copyrighted works as possible, logically.
(4) TLA is not part of the commercial market. We have no intention of marketing this game commercially, of publishing this game commercially, or anything of that nature. The project is much more than a game - it is a community of Tolkien fans who are so interested in his works that they have decided to share their interest with other fans through the medium of the real-time strategy computer game. TLA in no way aims to affect the commercial gaming market. In fact, The Last Alliance strongly endorses commercial Tolkien games, which our fans discuss and promote daily in the community forums.
Thus TLA is protected under the fair use clause of the US Copyright Law, simply because of the nature of the project. This excerpt from section 107 above in particular is of note:
...the fair use of a copyrighted work, including such use by reproduction in copies or phonorecords or by any other means specified by that section, for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright.
Because The Last Alliance is primarily a project of criticism, comment, news reporting, teaching, scholarship, and research, it is not an infringement of copyright, and therefore is legally legitimate.
-The TLA Staff