(02-12) 18:45 PST --

Artist Shepard Fairey says that he has distributed more than 300,000 copies of his iconic poster of President Obama with the word "Hope" written underneath and that it has inspired countless other versions. Now, the 38-year-old Los Angeles street artist, who says he used an Associated Press photograph as a "visual reference" for his piece, is in the middle of a copyright battle that goes to the heart of how media is made, remixed and mashed up.

Given the notoriety of Fairey's iconic poster, "it is kind of the perfect storm," said Michael Kwun, a senior staff attorney at the Electronic Frontier Foundation, a San Francisco digital advocacy organization. "It raises questions about what we as a culture and a legal society feel is proper."

The question is "how much leeway do we give a second-comer when they want to use someone else's original creation," said Michael Kahn, who teaches a course on censorship and free expression at Washington University School of Law and has represented artists and Fortune 500 companies in copyright disputes. "This would make a terrific question on a law school exam."

The fear among artists and advocates is that too tight an interpretation of copyright law would stifle creativity and expressions of political dissent. But courts have long tried to balance that approach with the need to protect the value of the original work.

New technology that makes it increasingly easy to combine different types of media is putting more people in legal limbo.

Case in point

Ask Stephanie Lenz, the Pennsylvanian woman who posted to YouTube a 29-second video of her toddler dancing to Prince's song "Let's Go Crazy" in 2007. When Universal Music Publishing Group demanded that YouTube take down the video, San Francisco's Electronic Frontier Foundation filed suit, claiming that it was a fair use of the song. The case is ongoing.

Or ask the owners of CommonWealth Press in Pittsburgh. After the Pittsburgh Steelers won their sixth Super Bowl this month, owner Dan Rugh started selling a shirt with the outline of the Lombardi Trophy, the word "Sixburgh" and the phrase "Yes, We Did" in the team's black-and-gold colors. Rugh stopped selling them after receiving a letter from the National Football League telling him that using the Lombardi Trophy image violates the league's registered trademark and the trophy's copyrighted design.

Started with poster

Fairey's fair-use journey started in January 2008, when he created the poster by taking a 2006 Associated Press photo of Obama at a news conference with actor George Clooney and tightly cropping the image around the then-candidate's face.

In Autumn, Fairey told The Chronicle that "the illustration does have roots in propaganda art. I also want it to seem like a patriotic image, but not be seen as too countercultural. ... It needed just enough mainstream ingredients to transcend."

Interest in Fairey's resulting image caught fire contiguously with Obama's campaign, and Fairey - an Obama supporter - began plowing the money he made from poster sales into producing more of them - eventually giving away tens of thousands of "Hope" posters in battleground states, according to court documents and past interviews he's done with The Chronicle.

Last month, an attorney for the Associated Press contacted Fairey, according to court documents, and said the use of the image required permission and credit.

This week, Fairey's attorneys - including Stanford University Law School lecturer Anthony Falzone - responded by suing in U.S. District Court in New York, asking the court to rule that the artist's work was protected by the Fair Use Doctrine of copyright law.

Courts determine if a new work is fair use by asking the following questions: Is the new work transformative - does it add new meaning - and not just replicate the original? What is the nature of the work? (Creative or fictional works generally get more protection than purely factual ones, legal scholars say.) How much of the original work is used? Does the new creation use the "heart" of the original? And how would the new work affect the market for the original? 

Visual reference

Fairey's attorneys say he used the photograph taken by Mannie Garcia as a "visual reference for a highly transformative purpose." Fairey's use hasn't affected the AP's ability to take photographs and sell and distribute them. Rather, "Fairey has enhanced the value of the Garcia photograph beyond measure," according to the complaint filed by Fairey's attorneys.

Fairey told The Chronicle last fall that originally, "my goal was to sell 350 prints and print 1,000 to mail out." Signed copies of the poster have sold for several thousand dollars on eBay.

The wire service argues he should have licensed the photo - much as rappers license a sliver of music they want to sample on a recording.

Why not seek license

"I would like to ask Mr. Fairey why he didn't just ask to license it," said Patrick Ross, executive director of the Copyright Alliance, a Washington trade group whose supporters include movie studios, television networks and artists interested in preserving copyright protection.

Fairey's attorney Falzone, executive director of the Fair Use Project at the Center for the Internet and Society at Stanford, declined to comment.

While several legal scholars predicted the case will be settled before it gets to court, some said they would like to see a legal ruling.

Ross said several visual artists have told him that while "what Fairey did was very cool, it was a rather pedestrian thing in the art world. I would love to see a court decide this. It would give everybody a little more guidance."