To be fair, this dance (especially the Destiny version) could be seen at any 80's dance club. Maybe that's why Destiny wasn't named in the suit.
'Member when people would come up with a dance and release an accompanying song with directions on how to do it?
Pretty sure that choreographies can be copywritten, but not individual dance moves. I'm not sure where the definition of one ends and the other begins, but emotes are generally <20 seconds. I'd be pretty surprised if cases like this don't get thrown out.
I'm more familiar with written works, so I'm not entirely sure how it translates to dance moves or choreography but I do know of a few things that are weighed in these cases.
Fair use suits have had significant resistance to bright-line rules. Bright-line rules are blanket decrees such as, "as long as you only use less than 10%, you can copy as much as you want for fair use." Each case must be resolved on a weighing of the material in context. This leads you to the concept of the Heart of the Work. Let's say a newspaper quoted a particularly juicy piece of gossip from an upcoming book that covered a celebrity's life under the auspices of reviewing it. Even though the scope of the infringement is small, it may be the only piece that the public is interested in. Thus, this infringement is more substantial then others and directly impacts the potential sale of the book. I don't know, but I imagine there must be something similar with dance moves regarding the value of a particular move as it relates to the scale of the infringement.
One big thing that video games have going for them is the first factor in which the nature of the copied work is analyzed. For instance, if a work of fiction is copyrighted, but it is put into a different context- say academic analysis, it is pretty well protected. A classroom can use that material freely. However, if the text was written for academic study such as a traditional textbook, a classroom can't use it freely because the use is not transformational. Transformational use is how google got away with scanning pretty much every book ever written to be used a a searchable archive. Parody is also covered by this. We have an unassailable right to make fun of something. I imagine that emotes could be argued to be transformational uses of the dances because they serve a totally different function in the context of games.
In any case, I'm intrigued by how this will play out.