UPDATE 1-Artist and news wire settle Obama portrait suit

Wed Jan 12, 2011 4:46pm EST

(Adds background and details on dispute in para 5-6)

NEW YORK Jan 12 (Reuters) - The artist who created an iconic portrait of Barack Obama and the Associated Press have agreed to settle a copyright dispute over use of the original photographic image, the news organization said on Wednesday.

Los Angeles-based artist Shepard Fairey's red, white and blue Obama "Hope" poster, created from an AP photo, became the iconic image of Obama's 2008 presidential campaign.

AP reached an agreement to share rights to produce the Hope poster and would collaborate with Fairey to make a series of images based on AP pictures, the news organization said in a statement.

Both sides had been scheduled to face off in court in March. They declined to specify the financial terms of the settlement agreement.

Fairey sued the AP in February 2009, preemptively seeking a ruling that his work was protected from AP's potential claims. His lawyers said he filed suit after the news organizationthreatened to sue him because his rendering was based on an image of then senator Obama taken by an AP photographer.

AP then countersued for copyright infringement.

A statement released by the AP on Wednesday said "AP and Mr. Fairey have agreed that neither side surrenders its view of the law."

"I am pleased to have resolved the dispute with the Associated Press," the statement reported Fairey as saying. "I often collaborate with photographers in my work, and I look forward to working with photos provided by the AP's talented photographers."

The original photo of Obama was taken by Mannie Garcia at a panel discussion at the National Press Club in April 2006 with actor George Clooney. The AP said Fairey's unlicensed use of the photograph constituted unfair use.

The AP's copyright infringement lawsuit against Obey Clothing, Fairey's apparel company, continues.

(Reporting by Basil Katz; Editing by Daniel Trotta and Sandra Maler)

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