In Campbell v. Acuff-Rose Music, 510 U.S. 569 (1994), the Supreme Court distinguished between “parody” and “satire” as follows:
For the purposes of copyright law, the nub of the definitions, and the heart of any parodist’s claim to quote from existing material, is the use of some elements of a prior author’s composition to create a new one that, at least in part, comments on that author’s works. See, e. g., Fisher v. Dees, supra, at 437; MCA, Inc. v.Wilson, 677 F. 2d 180, 185 (CA2 1981). If, on the contrary, the commentary has no critical bearing on the substance or style of the original composition, which the alleged infringer merely uses to get attention or to avoid the drudgery in working up something fresh, the claim to fairness in borrowing from another’s work diminishes accordingly (if it does not vanish), and other factors, like the extent of its commerciality, loom larger. Parody needs to mimic an original to make its point, and so has some claim to use the creation of its victim’s (or collective victims’) imagination, whereas satire can stand on its own two feet and so requires justification for the very act of borrowing.
(Footnotes omitted.) So: a parody comments on the work itself; a satire uses the work to comment on something else. The ruling in last year’s Don Henley v. Chuck DeVore copyright suit is closely on point. There, Senate candidate DeVore (R-CA) took Henley’s songs, and subbed in his own lyrics, which attacked Sen. Barbara Boxer (D) and President Obama (D). The court (again, tentatively), rejected DeVore’s argument that the use of Henley’s songs constituted parody, and concluded that the use of the entire compositions was not fair. (Campbell doesn’t exactly say, “If it’s a parody, it’s fair use; if it’s a satire, it isn’t.” But that’s how such cases usually play out.)