In this particular scenario I think Valve may actually be correct, no matter how absurd it seems. Producers of TV programmes have a similar issue as they need to track the licensing for every second of audio and video they use, even if they themselves own it. They need this if they ever want to relicense the programme to another production or broadcast company, sell it or even rebroadcast it, as they need to be able to show they can transfer the rights to all the assets they’ve used.

Imagine a nature documentary. The narrator appears on screen and introduces the next segment. The production company own the rights to the audio and video of that introduction as they commisioned it. Then the video of an interesting animal plays with some suitable background music. They’ve licensed the video from an independant cameraman, and the music from an external composer. What are the terms for relicensing in each of those contracts? What happens when, say, the composer demands royalties for the minute or two of their music? There needs to be a contract in place for that, and it all needs to be documented.

In this case, the developer has used assets that they own the IP on, but they are from a separate IP to the game. There needs to be a documented agreement that they permit that, should they ever sell the game, as otherwise the purchaser would own the rights to the game, but not the included assets, and the original developer could then sue for copyright on those assets. This is likely a problem for Valve for two reasons, one, they have a distribution agreement with the developer for the game IP, but not those specific assets, and two, they don’t want to be caught in the middle of any disagreement about the IP rights.

Ultimately the situation sounds ridiculous, but there’s actually a sound reason for it, and asking for a document stating thst those assets are licensed for use in the game isn’t particularly onerous, and avoid all these issues.