Infringement

Examples:

Download music
Play CD in night club
Use artworks or posters in your film

These are examples of verbatim copying.

Substantial Similarity Infringement

If a producer borrow some expressive elements from a copyrighted works and ends up with a production that is substantially similar to the copyright owners work, it is infringement.

This is very fact specific and courts decide on a case by case basis.

Fair Use - The Third Exception of Copyright

The Fair Use Doctrine is an exception or defense.

Copyright law allows one to use a reasonable portion of a copyrighted work without permission under certain circumstances. This is the Fair Use exception.

Fair Use 1 - Purpose (Why)

News reporting
Criticism comment
Teaching
Scholarship
Research (non-profit)
Parody (mocking or joking)

Fair Use 2 - Nature (What)

There is a hierarchy of copyright protection.
The more original and creative, the more protection.
Example: animated cartoon vs fact based works like encyclopedia
Generally, fact based works and works of limited availability are said to have "thin" copyrights and stand a better chance of being viewed as fair use.

Fair Use 3 - Amount of Work Used

There is no set amount
The less one uses the more the court is inclined to view it as fair use.
De minimuis: too little.
Quality vs quantity: please note that if one uses the best part of a work (known as the heart of the work) a tiny portion may be viewed as infringement.

Fair Use 4 - Market

Your work should not damage the copyright owner's ability to market his work.

You cannot compete with the copyright owner while using his work.
The key to all fair use is your work "transformative" - are you making something totally new.
No one would confuse it with the original.
Documentary filmmakers statements of best practices in fair use.

Parody

Parody involves the use of copyrighted work as a target of a joke, mocking.
Legally, parody is a form of criticism or commentary - a favored use.
Parody comments directly on the copyrights work - humor is not necessary.
Therefore, most parodies of people and copyrighted materials are permitted and much more (amount is permitted).

Other Considerations

Asking permission and being turned down
Advertising: fair use in film is not fair use in advertising
Credit:
- On the clip itself
- In the end credits