Tim Wu provides a clear, deliberate discussion of fair use in the context of Shepard Fairey’s Obama poster.
In particular, I like that he lists the kinds of fair use that have been declared specifically okay by the courts. (They include quotation, parody, journalism, thumbnail images, and a few more.) The list isn’t definitive; most of fair use is still pretty subjective. As Wu says, the Shepard Fairey case really comes down to a feeling. When you see this—
—what’s your gut reaction?
Mine is unequivocal; it feels 100% like fair use to me.
P.S. Fair-use lawyers are desperate to get more dimensions on that specifically-okay list, and they get pissed when somebody botches an opportunity to do so. That now describes Fairey’s case; it also describes the Google Books settlement, which started as a fair use case.