Brangelina, Shiloh, and Fair Use
This is yet another example of lawyers invoking copyright as a pretext for censorship. Gawker posted the thumbnail-sized image as part of its coverage of the news that an all-night bidding war drove the price of these photos into the stratosphere, with Time Warner paying $4.1m (nabbing the rights for People magazine) for exclusive U.S. rights. It seems reasonable that the story would include a thumbnail so that people know what the fuss was about.
If this isn't a fair use, it's hard to see what would be. Let's look at the four fair use factors. First, the use is for news reporting, an activity explicitly recognized as deserving of fair use protection in Section 107 of the Copyright Act. On the second factor, the nature of the work, while there is certainly creativity in the photograph, it is principally a factual subject -- Brad and Angelina's baby. The third factor -- how much of the original was taken -- also ought to favor Gawker. After all, they only took a 160 pixel thumbnail of the original. (It's not clear to me whether these photos are still "unpublished," but the Supreme Court in Harper & Rowe v. The Nation made it clear that the unpublished nature of a work does not preclude a fair use finding.)
Finally, as to the impact on the market for the original, it's hard to see how the reproduction of a low-resolution thumbnail significantly undermines the market for the original. The magazines locked in an auction war were presumably bidding for the right to reproduce the photos in their magazines in all their glossy glory. In other words, they weren't paying $4m for thumbnail rights. Moreover, their bids presumably already reflected a discount for fair uses that they were not legally entitled to prevent. (In fact Alison Crombie, spokeswoman Getty Images, which has exclusive distribution rights to the photos, said: "But I really don't think it will devalue the pictures as everyone is dying to see the full set.")
Finally, looking beyond the four statutory fair use factors, it seems apparent that the public interest in news reporting should tip the scales in favor of Gawker (and other journalists, scholars, educators, and commentators). This birth, after all, will be greeted in some circles as the biggest celebrity news story of the year.
Now we'll see if Time Warner continues its overreaching by sending DMCA notices to the ISP that hosts the Gawker website. That's a favorite abusive tactic of copyright owners -- rather than having a fight over fair use, they just send DMCA takedown notices to upstream providers, in hopes of winning by intimidation what they might lose in court.