Where Fantasy and Fair Use Collide
The IP ADR Blog:

Harry Potter and Copyright Fair Use junkies know this already – there is a firestorm brewing between the not insignificant powers (and financial resources) of JK Rowling and her Harry Potter franchise (which includes Warner Brothers) on the one hand and RDR, the wanna-be publisher of a fan’s "Lexicon" or reference guide, on the other.
And the battleground is copyright’s amorphous fair use doctrine.
Potter fan and Michigan middle-school librarian Steven Vander Ark has a very popular and comprehensive website that is considered to be the most authoritative reference to the Harry Potter series.
Among other things, the Lexicon collects in alphabetical order information on the series’ characters, places, spells, potions, and more, quoting liberally from the original language in the Potter books. The Lexicon was so popular, and so comprehensive, that JK Rowling herself frequented it as a reference guide and awarded it a "fan site award" in 2004.
Rowling’s views changed, however, when she learned that Vander Ark had cut a deal with book publisher RDR to create the Lexicon in hard copy and sell the book in stores. Before it could be published, Rowling brought suit in New York, claiming copyright infringement.
Her legal position is that the Lexicon merely reorganized, but otherwise copied, her words and ideas — a blatant infringement of her most basic copyright in her creations.
As Rowling notes, she has the exclusive right to create derivative works which is what the Lexicon is. Rowling further asserts that she intends to write her own Harry Potter encyclopedia of sorts in the next decade, with proceeds to be donated to charity.
RDR is screaming fair use, arguing that the Lexicon is transformative of the original work — that is, taking the original and creating a wholly new and different work of authorship. RDR points to reference guides that have been published for innumerable other works…