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ANSWER: FAIR USE!

The opinion in Adjmi v. DLT Entertainment, Ltd. can be read here. If you didn’t read the question, forget you ever saw the answer and click here.
The court was persuaded that, by taking a darker, more realistic view of Three’s Company’s themes, 3C criticized Three’s Company’s “happy-go-lucky” tone. Once the court found 3C to be a parody, all of the fair-use factors fall into line, as I’ve discussed previously.
What about Salinger? The “sequel” in Salinger felt like an attempt to trade on a famous book’s goodwill. To the extent the defendant tried to use the “sequel” to comment on Catcher in the Rye or J.D. Salinger, he failed—so badly that the court felt his intentions were post-hoc rationalizations. The defendant was just rehashing the themes of Catcher in the Rye without adding much insight. 3C, by contrast, is pretty clearly taking Three’s Company into a new artistic direction.
Did Adjmi win merely because Three’s Company is lowbrow, whereas Catcher in the Rye is highbrow? Courts, after all, aren’t supposed base their copyright rulings on artistic judgment.1Even the second fair-use factor doesn’t really call for artistic judgment, just a measure of creativity. A novel (or TV show) is more creative than, say, a parts catalogue or the organization of (to pick something completely at random) an API library. You can be “creative” and still create crap, and you can put together a database that’s truly a thing of beauty but still completely unprotectable. I think “high brow” works like Catcher in the Rye are probably much harder to parody the way 3C parodied Three’s Company—though they can be parodied in other ways—not because they’re snooty but because they’re denser. Characters are fully developed; the narrative is ambitious or detailed; and the themes are fully explored. Simply changing the tone wouldn’t create a new work (that referenced and commented on the old work), but would just be a gloss on the old work.
By contrast, Adjmi’s point in 3C is that Three’s Company didn’t fully explore its themes because that’s not what sitcoms did in the 1970’s.2Not that they can’t, right? Parks and Recreation? So poorly developed are the characters and so trite is the premise that Adjmi was able to turn Three’s Company into a completely different work by simply changing the tone. And by changing the tone, he was able to explore the themes that Three’s Company raised but couldn’t or wouldn’t address because they would’ve gotten in the way of the laugh track.

Is There Even Any Infringement?

What really seals Adjmi’s victory is how little of Three’s Company he actually took. The “amount and substantiality of the portion taken” is the third of the fair-use factors, but parodies are granted some extra latitude because they have to take enough of the underlying work so readers can identify the subject of the parody. But 3C takes hardly anything from Three’s Company. It follows no plot from any Three’s Company episode. All it takes is Three Company’s premise and six characters. At least five of the characters are stock characters (i.e., they’d be unprotectable on their own): the ditzy blonde, the shrewish brunette, the horndog, the impotent husband, and the dissatisfied wife.
The only really original element that 3C appropriates from Three’s Company is the male straight roommate who pretends to be gay, which is a reversal of the usual dynamic. But even he isn’t exactly a fully fleshed-out character. And it’s the one element that 3C alters the most, turning him into a gay man pretending to be straight pretending to be gay.
Is 3C even an infringement of Three’s Company? I think it would be (but for the fair use, of course), but it’s not much of one. Though Three’s Company’s principal and supporting characters are (with one possible exception) just stock characters, and the premise isn’t by itself protectable, the combination of all those elements probably is protectable. Put it this way: you can write play in which a man pretends to be gay to fool his landlord—that’s a premise that no one can own—but you probably can’t do it with the same set of stock characters. And you can write a play with these same six (or five) stock characters, but not with the same relationships as they have in Three’s Company.
But that particular combination is the only element Adjmi appropriated. That’s pretty impressive. Perhaps that’s because that’s all anyone remembers about it. I myself can hardly remember any one episode’s plot, though I can remember lots about the show.
Thanks for reading!

Rick Sanders

Rick is an intellectual-property litigator. He handles lawsuits, arbitrations, emergency injunctions and temporary restraining orders, opposition and cancellation proceedings, uniform dispute resolution proceedings (UDRPs), pre-litigation counseling, litigation avoidance, and other disputes, relating to copyrights, trademarks, trade secrets, domain names, technology and intellectual-property licenses, and various privacy rights. He has taught Copyright Law at Vanderbilt University Law School. He co-founded Aaron | Sanders with Tara Aaron-Stelluto in 2011.

    Footnotes

    Footnotes
    1 Even the second fair-use factor doesn’t really call for artistic judgment, just a measure of creativity. A novel (or TV show) is more creative than, say, a parts catalogue or the organization of (to pick something completely at random) an API library. You can be “creative” and still create crap, and you can put together a database that’s truly a thing of beauty but still completely unprotectable.
    2 Not that they can’t, right? Parks and Recreation?