Interesting blog post by Andy Baio about the thin line between fair use and the threat of expensive law suits.
In summary: Andy Baio produced a tribute to Kind of Blue, the legendary album of Miles Davis. He arranged all the copyrights etc. but forgot one thing: he made a pixel art version of the original photo of Miles Davis of Jay Maisel without his permission. This photographer was not amused and sued Andy Baio for copyright infringement.
At the end Andy Baio settled out of court to cut his losses.
The interesting question is whether or not there is an infringement of copyright or fair use. Baio shows in this post several original works and their transformations. Is there sufficiently new expression or meaning in the new work of art? Our personal feeling is that the transformation of Andy Baio stays rather close to the original while his examples are real transformations that are taking distance from the original.
In the end, Andy Baio was a kind of blue. Hopefully for him he found some consolation in the album of Miles Davis.