A compressed file containing Quake's source code would be covered by the copyright on Quake's source code. The compression algorithm would not. The algorithm cannot produce the plain-text copyrighted material without the compressed copyrighted material.

Copilot has the ability to produce Quake's source code nearly by itself. And it's a work (not a person), so it can be seen as a derived work. Like a compression algorithm that sometimes tacks on the first paragraph of "50 Shades of Grey" at the end of files.

I'm not a lawyer, but that's my opinion (admittedly, my opinion is softening each day). Plus, the purpose of the tool is to create code for inclusion in projects somebody will hold a copyright over, and they likely won't be the original authors. So it's output should be held to a higher standard than a compression algorithm or keyboard.