What do you think of the AP copyright infringement allegation against Shepard Fairey?

A comparison showing Mannie Garcia’s photograph of Obama next to Shepard Fairey’s ‘Progress’ and ‘Hope’ posters. The portrait of Obama by Shepard Fairey is a stencil portrait. Fairey created a stencil over a scanned and enlarged version of the photograph that was slightly tilted according to various articles. Fairey and a gallery that represents him has stated that he did in fact use the Garcia photograph as the base image for his Obama posters according to news articles. The Assosicated Press claims to own the copyright to Garcia's photograph and  desire compensation from Shepard Fairey. Fairey's lawyer states that Fairey did nothing wrong and that is use of the image falls under fair use. Do you think his use of the image falls under fair use? Since the photograph itself is not widely known some lawyers have suggested that Fairey's use does not fall under fair use. In order for it to be fair use there must be a dialogue between the old work and the new work that is obvious to the viewer-- obvious to the majority of the public. Unfortunatey for Shepard the majority of people, including Garcia and the AP, did not make the connection between Garcia's photograph and Fairey's Obama posters. So did Fairey fail at fair use? If so, did he willfully infringe on the photograph?

I have posted several articles about Shepard Fairey and fair use that might be of interest to some of you. My thoughts, http://www.myartspace.com/blog/2009/02/art-law-professionals-weigh-in-on.html