Fair use is an exemption to the rights of copyright holders. Without it, we would not be able to comment, critique, or educate with copyrighted materials.
The fair use of a copyrighted work for purposes such as criticism, comment, news reporting, teaching, scholarship, or research, is not an infringement of copyright.
In determining whether the use is a fair use, four factors need to be considered:
From the U.S. Copyright Office, Copyright Law of the United States, Chapter One, Section 107, “Limitations on Exclusive Rights: Fair Use”
The four factors are not a strict list of rules.
The factors are vague on purpose and they are interpreted on a case by case basis. One or two factors can also weigh more heavily than others, depending on the context.
These four factors work in balance with each other. For example, a person may be using copyrighted material for a commercial use (rather than a non-profit or educational purpose) but is utilizing a published copyrighted work, in a small amount, and their use will have no effect on the copyright holder's market value. This use could be considered a fair use.
Similarly, a non-profit educational organization could screen parts of a copyrighted film to a small group of students but charge a ticket price. This use would likely not be considered a fair use, even though the organization is a non-profit educational institution and they are not showing the whole film.