I agree, that do not(should not) have a leg to stand on here.
They might not like the fact, but the dev is selling his software, not theirs. It would be akin to MS sending a take down request to software running on windows.
I wonder how much "strength" the tos really has in this case.
The term "derivative work" covers a lot. For example all fan translations are one and all content stored on movie subtitles sites is by definition illegal. I don't know about those particular VR mods but in general case it is easy to show that game mod is not a standalone work and counts as derivative work, so game developer can limit the distribution however they want.
I think it's more a dependency and less a derivative (there isn't any source code/game objects being distributed via the mod as far as I can tell.)
I would be very interested to see how a court would rule on this, as AFAIK such as Lexmark v. Static Control Components, you can modify products you purchase, but how much weight would the TOS really hold?
