AP claims Fairey used the original stock image of theirs to make his work from. Please bear in mind - this is a press photograph, which was used in the newspaper article. Its intended purpose has been fulfilled and there will not be any losses of sales anymore because that edition will never be republished. It's a PRESS photograph, okay? It gets put in newspapers, which will sell or not sell regardless of whether that photo is in there or not.
I'm just trying to focus you on that. A PUBLIC resource, put out and sold into the PUBLIC by AP. Once you buy a newspaper, as far as I'm aware there's no law saying what you may or may not do with it. You can wipe your arse with it and that's fine. You can collect up every copy of a particular issue and wallpaper a room with as many copies of that photo as you can get hold of, and the newspapers cannot stop you from doing that, because you bought or obtained all the copies legally.
I could also obtain one copy of that newspaper legally, stick the photo to my wall in front of my easel, and paint a stylised version of the photo that could look exactly like the Fairey artwork. In fact, if I had done so, AP would be totally powerless to cease and desist me. You can't infringe an artist's right to paint, any more than you can infringe the right to free speech. The Press and newspapers depend on this right themselves. (Bear with me, this is the USA I'm referring to here.)
But because this involves a paint program and the web and this new-fangled electronics stuff, (and, probably to a much greater degree due to newspapers going slowly and despairingly broke in their hundreds,) AP have decided that this is, well, plagiarism.
Looking at the original and the Fairey print side by side, I can see (besides the obvious broad stroke colouring) dozens of differences in details. So between the art treatment and the details, to me that's enough to not only throw the case out of court, but also fine AP for wasting valuable court time and causing damage to Fairey's reputation.
Any artist is free to make a derivative work of art based on anything they can see or imagine. You can't stop someone painting a picture of your top secret prototype hovermobile toaster deluxe, because if they can see it, they can paint it. You have no legal recourse if that artist them sells that picture and a dozen works from a dozen different angles, to your opposition manufacturer. If you painted a nice picture of Obama entitled "hope" and then sold hundreds of copies, you'd have no recourse if someone else took your image and drew a copy of it and used it to cash in on your fame...