The article you linked to specifically discusses his polkas, which are not parodies, but rather mash-up/covers which do use the artist's original work and thus would be a violation of copyright law.
Of Montreal, Prince, Ween, & Pavement for DLC
First off, parody is protected as fair use BUT a lot of what Weird Al does would never survive a legal test of falling under a reasonable definition of parody. That's why his legal team very wisely declines to take any risks and secures appropriate rights in advance AND makes appropriate royalty payments. Weird Al is a nice guy, but that's the only reason he asks for permission.
Parody as a concept is protected specifically as a form of criticism of the underlying work. Now, to be fair, I think more than a few of Weird Al's songs could make a case for meeting this standard. But the lyrics have to work as a critical commentary on the underlying work. Just being funny lyrics doesn't make the cut. We may casually call that a parody, but that doesn't automatically make a legally defensible one. Indeed, there is specific case law on the issue where a "parody" of Dr. Seuss was found to be infringing because the content of the work was not commenting on Dr. Seuss.
Another issue that would be considered by a court is the quantity of the underlying work used for the parody. In the case of Weird Al's songs, that quantity is substantial. Two Live Crew's successful defense of their "Pretty Woman" parody involved a song which only sampled the underlying work. Its fair to say that even where his songs make a critical comment, this issue could still sink a legal defense of its nature.
Finally, there is an open question off existing case law on whether even if a song was protected as parody, whether this protection extended to being allowed to be licensed for other mediums (such as Rock Band). Its one thing to be allowed to release a commercial recording, but the issue of licensing that recording is separate and not one I believe that courts have specifically weighed in on. The commercial nature of a work is always considered in judging fair use, though a wide latitude is offered transformative works. The nature of then licensing another party to profit off a parody is potentially a legally distinct issue that an artist like Weird Al would again be reluctant to test.
Seems to me that even if a track was protected as a parody and all you had to pay was perhaps (maybe) a mechanical, taking a track apart in a video game would require a sync license and open the a whole can of worms that Harmonix wanted to avoid with the "No Covers" clause.
Last edited by rockdawg-1965; 03-17-2010 at 02:49 AM.