"Derivative work" is a very specific thing, and it's contrasted with "transformative work" in a way that matters a lot, and fair use intersects heavily with both.
Even when it comes to stuff that seems reaaaaally close to pure derivative: Googling "How long does it take to boil water?" => "If you're boiling water on the stovetop, in a standard sized saucepan, then it takes around 10 minutes for the correct temp of boiling water to be reached. In a kettle, the boiling point is reached in half this time."
That's a verbatim snippet pulled directly from https://unocasa.com/blogs/tips/how-long-to-boil-water, and yet Google exists and continues to do stuff like this under the fair use doctrine despite massive efforts to attack/monetize their service. [To be fair, Google does link results, which probably insulates them because it's less hurtful to the commercial interests of the source; that said, with open source there generally are no commercial interests to hurt (open source attribution will be a tough sell as an actual commercial interest), and that's specifically called out in the law as a factor]
Copilot is even less explicitly at risk IMO, in that it never even stores the text, nor can it reliably retrieve it. I have no idea what makes anyone think it should be more vulnerable than Google.
From the copyright.gov page on fair use (https://www.copyright.gov/fair-use/, worth reading in detail for anyone who cares about this stuff, also has links to a monumental number of cases with shockingly intelligible summaries): "Additionally, “transformative” uses are more likely to be considered fair. Transformative uses are those that add something new, with a further purpose or different character, and do not substitute for the original use of the work."
Copilot without any shadow of a doubt does add something new, with a further purpose, and does not substitute for the original use of any codebase on Github (it can't create any of the codebases in full, without manual guidance so extreme that you'd have to be using the actual original codebase as a reference, so it clearly cannot substitute for a single one of them, and that's what a lawyer will argue, likely successfully).
In the Google vs. Oracle case (see https://www.copyright.gov/fair-use/summaries/google-llc-orac...), a big piece of the fair use finding was that "its value in significant part derives from the value that those who do not hold copyrights, namely, computer programmers, invest of their own time and effort to learn." and "further[s] the development of
computer programs”. It's hard to see where Copilot wouldn't fall into that category, as well, and that's precedent on (multiple) appeal.
By my reading this should be a slam-dunk fair use ruling, unless precedent gets really upended, and Butterick is wasting a ton of time and effort for absolutely zero potential gain other than some bragging rights, but to each his own...I guess we all have to grind our axes from time to time.