Fan-Written Fiction (Fanfic) = slang. fiction written by fans of a TV series, movie, etc., using existing characters and situations to develop new plots.
Intellectual Property = law. property that results from original creative thought, as patents, copyright material, and trademarks.
Definitions provided by Dictionary.com
What the dictionary doesn't do is cite when fanfic violates Intellectual Property (IP). At what point is a law broken? Technically, the moment that fanfic goes on public record. Yep, the moment fanfic leaves the tear-stained notebook and gets posted on the Internet. And it's been happening long before the days of USENET. When does it become an issue for actual litigation? Depends on the IP holder. Some authors and estates thereof are quick to quash that shit...which suffices only to send the fanfic community of that world further underground and make cult fans grumpy. It doesn't actually stop fanfic from happening. Oh, and, of course, the lawyers get paid and no one else does.
Other authors see fanfic as a thing to be embraced as a means of building an audience. Still other authors just ignore it as they would the craycray who named all of her kids after every villain the author had created. As long as no fan is getting paid for the IP infraction, the authors and/or their publishers will not be paying lawyers to police it.
Significant Difference = All The Difference
Now, what about those tales like 50 Shades? Does Stephanie Meyer have grounds to sue E.L. James? There's a lot of money at stake. IP rights have jumped from page to silver screen. There are a lot of people waiting to make a lot of money from what EL James freely admitted "started as" Twilight fanfic. But. The key legaleeze here is significant difference. Yes, the term is vague and allows for interpretation. Yes, it is a bit grey (no pun intended, okay, maybe a little). When James changed the names, ages, and the locations, did she significantly change the content of her story so that it is no longer an infringement on Meyer's Intellectual Property? Erm. Maybe. What about changing all the virginal angst into full blown BDSM? If we combine that with the name and setting changes? Probably so. How about the style of writing not remotely resembling Meyer's? How about there not being any references to vampires or werewolves? Yeah. Yeah, James significantly changed the world and the characters into a wholly different story.*
On the other hand, what about those stories that clearly rehash well known fairy tales? What about all those authors making money off of kinky re-tellings of Cinderella? Red Riding Hood? Beauty & the Beast? Often times they're using the the same world. Same characters. Similar plot. Aren't they guilty of fanfic transgressions? Or does the fact that fairy tales are legally in the public-domain make these authors less villainous than fanfic-ers of copyrighted works? In the eyes of the law, fairy tales aren't protected works. They've been around longer than the magical 75 years of protection and/or 50 years after the death of the original author. Hell, the vast majority of fairy tales can't be attributed back to their original authors so there is no one to bring an IP suit. It's legally acceptable to profit from it, but how does it differ from fanfic?
By a publisher giving its blessing?
Lest anyone say fanfic is purely a story being twisted by a heavy dose of porn -- it's not just fetishists toying with the classics. Anyone recall the rash of Austen Zombies, anyone? Those stories were widely embraced in the Best Seller fashion for months. Those authors were slapped on the back and given a "well-done, laddy" by peers and industry for their version of fanfic. Yes, I'm aware Jane Austen died in 1817.
Is fanfic that breaks IP law the only type that should be reviled?
What makes fanfic artistically different from "Modern Re-Tellings"? It's not quality. There's some heinous fanfic and there's some staggeringly great fanfic. There are also notable re-tellings of classics sharing retail-shelf-space with some shittastic hackwork. Is the all of the objection to fanfic rooted in living authors being "hurt" (financially and possibly emotionally) by fanfic, yet Homer is so dead that he can't possibly suffer from a good "re-visioning"? Is the vitriol spewed towards fanfic rooted in a latent fear of the IP-owning author that someone will write their worlds and their characters better than they did?
Any established author with a mote of civility will tell a fanfic writer to man-up and write their own world and establish their own characters -- to become a real author. That advice is totally based on the assumption that fanfic writers aspire to become recognized authors. That advice ignores the fact that fanfic is a social advent -- one fan communicating with other fans via the commonly established preferred medium.
That preferred medium and that shared story is exactly why modern retellings of unprotected classics are cash ponies for publishers.
It's one thing to be influenced by other works. Any author worth reading has been influenced. But where is the line between "acceptable tributes" and "abhorred bastardization"? If you piss on one type, shouldn't you piss on both?
*Nope, I'm not a lawyer. I once tried to learn Communications Law by osmosis.