I read the link you provided, which was very informative, but the statement you made above the link is just false. From the document you cited:
In other cases, however, a work containing AI-generated material will also contain sufficient human authorship to support a copyright claim. For example, a human may select or arrange AI-generated material in a sufficiently creative way that “the resulting work as a whole constitutes an original work of authorship.” [33] Or an artist may modify material originally generated by AI technology to such a degree that the modifications meet the standard for copyright protection.[34]
In these cases, copyright will only protect the human-authored aspects of the work, which are “independent of” and do “not affect” the copyright status of the AI-generated material itself.
If you pay close attention to the last sentence, it clearly specifies that the only copyrightable content of that transformative work, is the part of the work that is transformed. For example, if a person gave an AI a prompt and had it come up with an entire world, a bunch of city names, a bunch of characters, etc. If they had it come up with the premises of a story and the world it’s set in, and then the person wrote a book using sentences and paragraphs they create using that world and those characters that the AI came up with, the outcome isn’t a work you can fully copyright.
That person would be able to copyright the overall story; the book. The way the story is told. However, they cannot copyright any of the characters, any of the towns, any part of the world, because it was generated by AI. That’s why the distinction between using AI as a prompt (to come up with your own original ideas from based on what it gives you), and using an AI prompt (using work that an AI gives you directly from a prompt you gave it) are extremely important distinctions.
On the flip side of the example I gave, if an author has ideas for characters, and the world, and the story, and it prompts an AI to write that story using those characters and that world, then the opposite from before is true. Those characters and that world are viable for copyright. The book/game itself is not viable for copyright. The sentence structure, pacing, and way the piece of art was written was decided by AI. Therefore, the piece of art (book/game) could not be copywritten itself, however the ideas within it could.
This is why, for writing especially, publishers don’t want to have anything to do with AI. Because they won’t own the full material.
Once again, as stated in my earlier statement for your comment about the visual novel, and this quote is taken from the document you posted:
In February 2023, the Office concluded that a graphic novel [9] comprised of human-authored text combined with images generated by the AI service Midjourney constituted a copyrightable work, but that the individual images themselves could not be protected by copyright.
No publishing company is ever going to agree to that when they could sign on developers that give them full rights to their created product. If someone is a lone developer seeking to individually create something, then they can. But again, they cannot claim anything generated by AI as theirs if they have not met the transformative requirements for such a product. If that developer is fine with people taking the art from the game and turning around and selling it and claiming it as their own, than more power to them.
But trademark wouldn’t protect that either. Trademark is protection of, “…a company’s or product’s brand identity, such as its name, logo, slogan, or other distinctive mark.” So they could trademark the name, but it’s a grey area if the name is AI generated, because then it can’t be copywritten, and trademarks only legally apply to products that are used to promote the use of the goods and services in commerce.
In short, the nuances of what is copyrightable and what isn’t, especially in text based art, makes it an extreme hassle. There is no way that a company like CoG is going to jump through the innumerable hoops it would take to even partially allow AI rather than just ban it altogether.