In considering whether a work is derivative, the key question is whether multiple, significant distinctive elements of the source work are used in the allegedly derivative work. It is also significant whether the two works display "substantial similarity". The amount of effort that goes into a work is not relevant. Nor is the market value of each work. A work need not be totslly distinct from previous works to be protectable by copyright.
In Nichols v. Universal Pictures Corporation, 45 F.2d 119 (2d Cir. 1930) the 11th circuit court of appeals held that a mere stock figure was not enough to make a work derivative. This case is still considered the basic rule on derivative works. The opinion held that copying musty be "substantial" to make a work an infringement. Judge Learned Hand wrote:
It is of course essential to any protection of literary property, whether at common-law or under the statute, that the right cannot be limited literally to the text, else a plagiarist would escape by immaterial variations.
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... the question is whether the part so taken is "substantial," and therefore not a "fair use" of the copyrighted work; it is the same question as arises in the case of any other copyrighted work. Marks v. Feist, 290 F. 959 (C. C. A. 2); -Emerson v. Davies*, Fed. Cas. No. 4436, 3 Story, 768, 795-797. But when the plagiarist does not take out a block in situ, but an abstract of the whole, decision is more troublesome. Upon any work, and especially upon a play, a great number of patterns of increasing generality will fit equally well, as more and more of the incident is left out. The last may perhaps be no more than the most general statement of what the play is about, and at times might consist only of its title; but there is a point in this series of abstractions where they are no longer protected, since otherwise the playwright could prevent the use of his "ideas," to which, apart from their expression, his property is never extended. Holmes v. Hurst, 174 U.S. 82, 86, 19 S. Ct. 606, 43 L. Ed. 904; Guthrie v. Curlett, 36 F.(2d) 694 (C. C. A. 2). Nobody has ever been able to fix that boundary, and nobody ever can.
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In such cases we are rather concerned with the line between expression and what is expressed. As respects plays, the controversy chiefly centers upon the characters and sequence of incident, these being the substance.
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It follows that the less developed the characters, the less they can be copyrighted; that is the penalty an author must bear for marking them too indistinctly.
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... granting that the plaintiff's play was wholly original, and assuming that novelty is not essential to a copyright, there is no monopoly in such a background. Though the plaintiff discovered the vein, she could not keep it to herself; so defined, the theme was too generalized an abstraction from what she wrote. It was only a part of her "ideas."
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The testimony of an expert upon such issues, especially his cross-examination, greatly extends the trial and contributes nothing which cannot be better heard after the evidence is all submitted. It ought not to be allowed at all; and while its admission is not a ground for reversal, it cumbers the case and tends to confusion, for the more the court is led into the intricacies of dramatic craftsmanship, the less likely it is to stand upon the firmer, if more naïve, ground of its considered impressions upon its own perusal. We hope that in this class of cases such evidence may in the future be entirely excluded, and the case confined to the actual issues; that is, whether the copyrighted work was original, and whether the defendant copied it, so far as the supposed infringement is identical.
See also: "Open Source Copyright Casebook; Class 4: Derivative Works by Brian L. Frye, Assistant Professor of Law, University of Kentucky College of Law. This discusses image copying and reproduction specifically.
Frye writes:
Notably, copyright only protects the original elements of a derivative work or compilation: "The copyright in a compilation or derivative work extends only to the material contributed by the author of such work, as distinguished from the preexisting material employed in the work."
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Notably, a work that copies the ideas expressed by a preexisting work is not a derivative work, because it is not a copy of that work. Copyright cannot protect ideas, so the author of the new work has not copied a protected element of the preexisting work.
See further Frye's long discussion of Gracen v. Bradford Exch., 698 F.2d 300 (7th Cir. 1983) in which questions of whether a painting was a derivative work of a film, and what rights the painter had, are dealt with.
