Shepard Fairey Sues AP: Is Obama Image Fair Use?

So Shepard Fairey has decided to ask a Federal Court to declare that his now famous rendering of President Obama does not infringe upon the AP's copyright in the photograph upon which it is based.  Fairey apparently argues that his use of the photograph is exempt under the "fair use" provisions of the Copyright Act.  The doctrine of "fair use" permits the reproduction of copyrighted material in limited circumstances, such as satire, news reporting, criticism, scholarship, and research.  Section 107 of the Copyright Act also identifies four factors to be considered in whether a particular use is "fair."

1. The purpose of the use, such as whether it is for commercial or nonprofit purposes;

2. The nature of the underlying copyrighted work;

3. The amount of the copyrighted work copied; and

4. The effect on the market or value of the copyrighted work

At first blush, it would appear that the first and third tests would not favor application of "fair use" but the fourth probably would.  This does not appear, however, to present a clear case of "fair use."