A favorite course in college was Communication Law. It was interesting and, as it turns out, one of the most helpful classes I ever had. Not because I remember all the law stuff, but because my rough familiarity makes me really interested to understand contemporary applications of fair use and parody.
The social web has made this much more handy than I ever thought. We once had an entire campaign for Microsoft based on fair use, which is still one of my favorite collaborations.
All of this is why I enjoy the weekly emails from the Art Law Journal. They take what could be a bland topic and write about comm law in a cool way while choosing topics that aren't what you'd expect something called the Art Law Journal to write about.
Like why Kiss My Ass is parody.

And why the Power Rangers short film probably wasn't Fair Use, but it won out anyway.

Since I look this stuff up on a reoccurring basis, I thought it would be handy to capture the key points on parody and fair use in one place.
What Qualifies As A Parody/Protected By Fair Use?
1. To be a parody it must be obvious: the audience should not have to struggle to figure out what is being made fun of.
2. To be a parody the creator must take no more of the original than necessary to make the point. (So changing just the words in a chorus of a popular song, while leaving the rest of the song intact, is likely not fair use.)
3. The parody cannot pose a direct threat to the market for the original work. (Would people buy the parody instead of the original, cannibalizing sales of the original?)
Saturday Night Live is very familiar.
And then...
The Four Factor Test That The Courts Run To Evaluate Fair Usage
1. The purpose and character of the use: news reporting, educational usage, research and criticism/comment all fall here.
2. The nature of the copyrighted work: typically, choosing facts over fiction and published content over unpublished is more likely fair use.
3. The amount of the portion taken: small portions of material and parts that are not "the heart of the work" is more likely fair use.
4. The effect of the use upon the potential market: if the use has no significant effect on the original's market, it's more likely fair use.