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That's not the point. It's possible what he did should be protected by fair use. It's also possible that it shouldn't be and that he owed money. The point is, there was never a trial to decide it one way or another, he had to settle, not because he thought his case was weak, but because it was cheaper than if he did take it to court, win or lose.

The problem is that attempting the fair use defense results in an "I win or you lose" case, where either the defendant wins the case and loses some money, or the defendant loses the case and loses some more money.