NEW YORK – Shepard Fairey's claim that he had the right to use a news photo to create his famous Barack Obama "HOPE" poster became a widely watched court case about fair use that now appears to have nearly collapsed.

ByFriday night, his attorneys — led by Anthony Falzone, executivedirector of the Fair Use Project at Stanford University — said theyintend to withdraw from the case and said the artist had misled them byfabricating information and destroying other material.

Fairey himself admitted that he didn't use The Associated Press photo of Obama seated next to actor George Clooneyhe originally said his work was based on — which he claimed would havebeen covered under "fair use," the legal claim that copyrighted workcan be used without having to pay for it.

Insteadhe used a picture the news organization has claimed was his source — asolo picture of the future president seemingly closer to the iconicred, white and blue image of Obama, underlined with the caption "HOPE."Fairey said that he tried to cover up his error by submitting falseimages and deleting others.

The distinction iscritical because fair use can sometimes be determined by how much of anoriginal image or work was altered in the creation of a new work. IfFairey didn't need to significantly alter the image he used — in thiscase the solo shot of Obama — then his claim could have beenundermined. Fair use cases also may consider the market value of thecopyrighted material and the intended use of the newly created work.

"Shepard Fairey has now been forced to admit that he sued the AP under false pretensesby lying about which AP photograph he used," said AP vice president andgeneral counsel Srinandan R. Kasi. "Mr. Fairey has also now admitted tothe AP that he fabricated and attempted to destroy other evidence in aneffort to bolster his fair use case and cover up his previous lies andomissions."

Kasi said Fairey's admission struck "at the heart" of Fairey's defense that he was protected by fair use.

Kasisaid the AP would continue to pursue its countersuit alleging thatFairey willfully infringed the AP's copyright. It was not immediatelyclear from the statements issued and court filings if Fairey wouldcontinue with his case, but a person close to Fairey said that theartist would. The person was not authorized to discuss the case andspoke on condition of anonymity.

Falzone saidin a statement that the legal team's decision to withdraw had nothingto do with the "underlying merits" of Fairey's case.

"Webelieve as strongly as ever in the fair use and free expression issuesat the center of this case, and believe Shepard will prevail on thoseissues," Falzone said. "We hope this unfortunate situation does notobscure those issues."

Laurence Pulgram, an intellectual property lawyer who represented Napster in a copyright fight with the rock band Metallica, said Saturday that Fairey's case was in trouble.