FINE PRINT: WHAT YOU ABSOLUTELY NEED TO KNOW TO KEEP FROM BEING SUED
Be forewarned, this is kind of a long chapter. Essentially, you can do and say anything you want in a video, but there are certain laws regarding things like copyrights, libel and slander that provide some hidden landmines that many viral video makers trip over. What really stinks is that you usually won't get in trouble until your video's a hit, so you finally get a million views, but now you have to take it down because one of those million views was someone who works at Sony BGM, and they're going to sue you if you don't remove a song they hold the rights to from the soundtrack.
The line between what you can and cannot do is a little blurry, but we'll try to explain it in plain English, and not Legalese.
COPYRIGHT LAWS
When it comes to copyright laws, there's actually quite a lot you can get away with. Even stuff that's technically not legal, copyright laws only come into effect if the copyright holder wishes to press charges.
However, it's usually best to play it safe.
ESSENTIALLY, HERE'S WHAT YOU CANNOT DO...
You cannot use copyright protected songs on the soundtrack without permission from the copyright holder. Millions of youtubers get away with this every day and nobody seems to mind, but if you're not so lucky, most video sharing sites will either mute the audio, forcing you to remix the sound of the video with a new song, or they'll just remove the video altogether.
You cannot use unedited clips from a movie. Technically, you shouldn't be able to use any footage at all, but most movie companies don't seem to mind when people make fake trailers for their movies or cut different scenes together to make Robocop vs. Terminator. It works as publicity for films that are often forgotten by now, piquing public interest and earning them a few DVD sales. However, if you just put your favorite scene from Kill Bill on the internet without Quentin Tarantino's permission, you can fully expect it to be taken off the site pronto.
AND NOW, WHAT YOU CAN DO...
You can use anything you want in the context of a review, but only up to ten percent or thirty seconds of a song, and only ten percent or three minutes of a movie, whichever is shorter.
Thanks to the Fair Use laws, you can literally use any fictional character or public figure, you can steal any plotline from any movie, you can mock any politician, actor or musician, you can do your own cover of any song... just so long as what you're doing falls under parody. For example, everything Weird Al Yankovic does is completely legal. He still asks permission from the original artists, but he does so only as a courtesy.
Defamation is defined as being any statement made, in print, speech or broadcast (and this includes viral videos) with the sole intention of giving a negative impression of a person or a group of people.
It is generally required that, first, the statement must be false, and second, it must be made to somebody besides the defamed. So if you called someone a jerk to his face, that wouldn't count. In fact, just calling someone a jerk wouldn't count in the first place, since that's a matter of opinion, as opposed to something that could be construed as a "false fact". Rather, defamation involves stating something that could be theoretically proven or disproven, so you can't make a video saying that President Obama is a Muslim extremist or something ridiculous like that.
However, again, you can say whatever you want about whoever you want in the context of parody. If you want to make a video where you dress up like some celebrity and do something ridiculous, that's completely covered as parody. You just can't make a video where you make things up about someone and pass them off as fact.
THE FACT OF THE MATTER
The truth is that, often times, the laws on the books don't really matter. Very rarely, works of clear satire have been sued out of existence by the copyright holders of the ridiculed characters.
More than a few Mickey Mouse spoofs have brought their creators troubles. It is technically one hundred percent legal to spoof Mickey Mouse, but Disney has some of the best lawyers in the world, so just know you're treading dangerous waters if you want to do anything with their characters, even if it's one hundred percent satire.
What it comes down to is that it is up to the judge in a given case. You're depending on his knowledge of copyright and defamation law as well as his fair judgment. Defamation cases have actually been won by the plaintiff for things that are entirely true, and lost on things that are entirely false.
This is why we suggest playing it safe. Satire whatever you like, since the cases where clear satire is punished are rare, but be cautious and know the line between spoof and defamation.