[bdowling]

You have that backwards. Taking the Harry Potter text and copying large portions of it, even if the names are changed, would be literal copying. Writing a book that borrows the story, characters, and relationships between the characters from Harry Potter, but written in your own words using new character names, would be non-literal copying. A derivative work, on the other hand, would be taking Harry Potter and making something new from it, such as writing a novel about a new adventure involving Harry and his friends, or adapting Harry Potter to a new medium like a VR game.