The issues here can be argued endlessly without resolution because the only definitive way to resolve a fair-use dispute where the issues are close is to take it to trial in a federal court.

17 U.S.C. sec. 107 provides that, "in determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include [four factors]" (which factors are the "purpose and character of the work" (including whether it is commercial or non-profit), the "nature of the copyrighted work," "the amount and substantiality of the portion used in relation to the copyrighted work as a whole," and the "effect of the use upon the potential market for or value of the copyrighted work." These factors represent the so-called 4-part test used by courts to determine whether an allegedly infringing use is "fair use" or not.

These factors constituting the broad legal test for fair use are very general and can apply in a thousand different ways and combinations to different facts. What is worse, the four statutory factors, though first codified by Congress in the 1976 Copyright Act, had first been developed by courts long before that and were never the exclusive factors to be used in making a fair-use determination. Thus, when Congress codified them, it specifically provided that the fair-use determination was to "include" those factors but was not to be limited to them. Thus, the legal test was deliberately kept vague and was all along intended to be left for final determination, case-by-case, in the courts.

Given this legal landscape, anyone who wants to take a copyrighted work and transform it to a new use even while copying it in whole or in part risks an infringement suit and, the closer to the legal line the copying gets, the greater risk that a lawsuit will be filed and will need to be defended all the way to trial (with a substantial 6-figure price tag being inevitable in such a case - see http://news.ycombinator.com/item?id=2688599). This is because fair use is not a bar to a lawsuit; it is merely an affirmative defense that one can try to stand upon in defending against an infringement action. In defending, though, you also run the risk of losing on the merits and so you run the risk not only of having to incur hundreds of thousands in legal fees but also that of having to pay huge statutory damages should you lose the case.

That is the dilemma in which Mr. Baio found himself. He believed himself right. But he had no way to test it short of incurring large lawyer costs and liability risks. Nor can he ever win the "case" definitively in a court of public opinion because it is too close. He does have a compelling argument (his work can readily be argued to have independent artistic value and to be transformative and not in any way supplanting any market opportunity available to Mr. Maisel). But there is no way to definitively refute the equally compelling argument that Mr. Maisel can make (a substantial part of his work was used, or at least the "heart" of it and the aesthetic additions do not - he would argue - truly transform a work that remains primarily imitative in quality). Yes, good lawyers can sharpen and refine these arguments to the nth degree and that is where the 6-figure price tags come in. Of course, the only way to test who is right is through a trial. And, there being no practical way to get to a trial, the issue will remain unresolvable.

Note that a legislative solution to this type of issue is possible. Just as the fair-use statute explicitly says that one form of fair use is for "criticism," it might also say that it is a fair use to take a photograph and to do a pixelated rendering of it that adds artistic elements. Law can always be defined this way if desired. But, just as one does not code well by addressing only a specific case where a broader algorithmic solution is possible, one also does not normally pass laws to deal with isolated, individual cases where broad principles can govern a broad swath of cases. Copyright applies to countless situations and the fair use rules are broad and general. Given this, a dispute such as this will always prove frustrating to litigants and those with deep pockets will inevitably have the advantage.