In case you're not familiar with "artist" Shepard Fairey, he originally came to prominence through his mass blanketing of stickers with an illustrated image of Andre the Giant accompanied by the word "Obey." (I used to pick up stacks of those stickers in the early 90's and put them on stuff ranging from trash cans to tripods.) Most recently, he achieved notoriety for stealing the image of Barak Obama from photographer Manny Garcia and then denying it in court.
In an interested turn of events, Fairey admitted that he not only stole the image, he also fabricated evidence and convinced witnesses to demonstrate that he didn't. So now he not only lost his case against Garcia and the Associated Press, he's facing possible jail time. Serves him right. Check out the story here.
And in other news, my photographer friend Dina Douglass was asked by Shepard Fairey to provide a portrait photo of a cancer survivor for use by Fairey in a charity auction. They agreed to some simple terms - which of course Fairey completely disregarded. The worst part of it is that though Fairey's rendition of Dina's painting was completely based upon her photo - she got no credit nor payment though the image was displayed in galleries around the world and even on the Nike website!
Note how the derivative artwork has Fairey's signature on it. Because it is a derivative work from the original copyrighted image, the copyright does not actually belong to Fairey - it belongs to Dina Douglass. Many "artists," designers and even photographers believe that if they change an image by XX percent, then the original copyright no longer applies. That is completely untrue. The copyright to any art that is based upon an original artwork will always rest with the creator of the original work - no matter how much the image is tweaked, illustrated, or composited with other images..
The other thing that I'll point out is that a written agreement should be used in every single transaction with a client. Whether it's a wedding contract or a simple commercial invoice with terms and conditions, every time we provide images to a client, the terms need to be in writing. A stock invoice accompanying one's photograph in a case like this makes enforcing an agreement and a cash settlement much more straightforward. (A stock invoice is included in the Toolkit Commercial Contract Kit.)
Here's the link to Dina's full story as written on her blog.