Fairey and the Associated Press are engaged in a lawsuit over the question of fair use; I will render a verdict on that later.
Photographers, particularly those that are trying to make a living at it, face rights issues because photography necessarily appropriates reality and reality is often owned. As a member of an organization of photography professionals, ASMP, we are advised to always obtain model and property releases so as to gain rights to content of our own images. Photojournalists, such as Mr. Garcia, need not do so because content from the public domain or otherwise newsworthy imagery is usually considered fair use.
Sometimes a misunderstanding or fear of fair use policy creates a chilling effect. For example, in 2005 I photographed The Gates by Christo and Jeanne-Claude, which is an art work consisting of the temporary installation of suspended orange fabric all over Central Park. The artists do not accept donations or sponsorships but collect revenue by selling product related to the exhibit. A few months later, I submitted a photo essay on The Gates to a photography website which rejected it for fear of litigation, in spite of the fact that images of The Gates were appearing in the national media.
Terry Gross also interviewed a lawyer, who reported that fair use law is based on various tests, whose application is open to interpretation.
My opinion is that Shepard Fairey's use of Mr. Garcia's image does constitute fair use. As a photojournalist, Mr. Garcia makes photographs that are expected to be factual and possibly newsworthy. He also enjoys the special privilege of preferred access, which is extended only to credentialed members of the press. Within the commercial world of news photography, Mr. Garcia has rights which obligate those who exploit his photographs to both pay him and credit his work.
But Mr. Fairey is not in the business of consuming or redistributing news photography, rather, he is an artist who creates new works of cultural and political significance based on news artifacts. Just as Mr. Garcia enjoys the privilege of access to Obama and the rights to Obama's image, Mr. Fairey should enjoy the privilege of fair use of these news artifacts. To do otherwise would limit free artistic expression and would tend to chill political commentary and parody.
Ironically, Mr. Fairey is being ripped off more than anyone. Obamicons are the new smiley face and I am assuming that Mr. Fairey is not profiting in anyway, nor is he being asked for permission.

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