I cannot remember where I first saw "litfic," but I remember that it was being used in contrast to "fanfic" and that the context was clear that the person was contrasting conventionally published and paid fiction (novels, etc) to online, not-for-profit works with elements or characters borrowed from and owned by others.

Looking at the fanlore definition, I honestly can't say whether or not the writer who used "litfic" meant to further specify literary fiction (The Namesake as opposed to genre fiction (scifi novels), but I am certain she was not using it to mean fanfiction based on print materials (as opposed to fanfic based on movies and TV). I took "litfic" to be synonymous with "profic" (again, conventionally published novel as an example), and not a specific style of conventionally published work.

I'm not sure now if I've seen "litfic" used to refer to fanfiction based on print materials- if I have I wonder if I was misunderstanding it.... The problem is made a little more dense in that the kind of print-inspired fanfiction I read is usually based off of genre novels rather than literature. This might confound my sources even more.