In February 2007, Stephanie Lenz posted on YouTube a thirty-second-long video of her infant dancing to Prince's song, "Let's Go Crazy."
In June 2007, Universal Music issued YouTube a takedown order, saying that the video infringed on their (and Prince's) copyright.
In July 2007, Lenz sued Universal, saying that her video fell under "Fair Use."
Universal moved to dismiss her suit, claiming, in effect, that there is no such thing as "Fair Use," and all unauthorized uses, regardless of length or how far in the background, constitutes a copyright infringement.
Today (August 20, 2008), a district court in San Jose denied Universal's motion to dismiss. Here's an article about the case from the Electronic Frontier Foundation, who is working on behalf of Stephanie Lenz in this matter. And here is the court order denying the motion to dismiss.
It might not sound like much, but it's the first time that a court has told a music corporation that they do, indeed, need to consider "Fair Use" when deciding whether to intimidate, prosecute or persecute individual citizens.