I feel like the argument about it being transformative is in favor of TFS, but the argument about it not being a replacement for the original is dead in the water instantly. There is absolutely no way they could argue around that.
The argument isn't about it being transformative, the actual argument is about whether DBZA is a fair use which is their only defense if Toei ever took them to court. Fair use is solely a defense you can use in court and not something that automatically frees you from litigation. It's also not something universally applied and evaluated on a case by case basis. Generally the factors that courts use to evaluate are as follows:
1) Purpose and character of the use, including whether the use is of a commercial nature or is for nonprofit educational purposes: It could be argued that TFS is doing things non-profit but not for lack of trying. They also have a patreon along with merch that's all really skirting the line on copyright at times. I think it's a real toss up how a court would find what they do to be. It's most definitely not nonprofit nor educational. But it's not a straightforward commercial work. They have that little disclaimer in front of videos but those hold zero legal weight. I think it's a toss up and I would lean on the side of them not winning on this factor. But that's up to the hypothetical court.
2) Nature of the copyrighted work: DBZ is not some old obscure cartoon whose license holders are nowhere to be found, it's one of the biggest Japanese properties in the world. It's a commercial product and not a research paper. They absolutely lose on this count.
3) Amount and substantiality of the portion used in relation to the copyrighted work as a whole: Another factor in which they absolutely lose. Entire episodes are derived from footage, music, sound, dialogue, etc that is not their own. They aren't short video essays. Length of the work, doesn't automatically mean something is not fair use but DBZA's core is definitely its usage of DBZ.
4) Effect of the use upon the potential market for or value of the copyrighted work: Ironically enough, this is one where I disagree with most people. I think that DBZA has little to no effect on DBZ's market value and as such should pass on this factor for its possible fair use argument. Hilariously, I think that DBZA's most rabid fans are the ones who are biggest reasons as to why they would fail on this factor. They have tons and tons of people talking about how it's the best version of the series. Even DBZA's creators talk about how it's had an impact on DBZ's primary fanbase.
Ultimately, we would never know until one party takes the other to court and they evaluate its fair use defense. I'm of the opinion, that DBZA fails and it fails hard due to factor 3 in particular.
Well, sort off kinda off. If we take for example the Netflix Bebop show, they didnt need to approach the creator, just the company that has the rights with a good suitcase full of cash. Same deal would be with DBZ, cause I believe that Toei has a bigger ownage of the IP than Toryiama does.
Bebop and DBZ are different in that Bebop was always an original work made for and produced by Sunrise. The creative team behind Cowboy Bebop never had any ownership in the first place. DBZ on the other hand has always been a licensed property to Toei. They hold complete rights over the animation but they still have to answer to Toriyama and Shueisha who hold the rights to the original work DBZ is adapted from. Here is the copyright page from Funimation themselves on DBZ:
The Official Dragon Ball Z anime website from FUNimation
www.dragonballz.com
You'll note that Bird Studio and Shueisha are included in the licensing legal jargon along with Toei. Shueisha is the parent owner of Dragon Ball along with Bird Studio. Shueisha is the publisher in Japan who published Dragon Ball in Weekly Shonen Jump originally and later on its collected volume formats. Bird Studio is Toriyama's studio for holding and licensing his copyrighted works, the name derives from Toriyama's name itself (Tori = bird in Japanese). Creator rights are very good for manga artists in Japan. Prominent ones also hold a lot of sway outside of the legal realm as they are given tons of deference due to the respect for them.
