Fair Use is the term used in the United States. In Canada, the principle is known as fair dealing.
An article on the library web site of Stanford University summarizes some of the basic aspects of Fair Use in the United States:
In its most general sense, a fair use is any copying of copyrighted material done for a limited and “transformative” purpose, such as to comment upon, criticize, or parody a copyrighted work. Such uses can be done without permission from the copyright owner. In other words, fair use is a defense against a claim of copyright infringement. If your use qualifies as a fair use, then it would not be considered an illegal infringement.
See this article for a deeper analysis.
So according to Fair Use it is permissible to include the intellectual property of other creators in your own creation if it for the purpose of making a point. For instance, if you were criticizing the argument in a book by Noam Chomsky, it would be acceptible to excerpt passages from his copyrighted material to explain what you don’t agree with.
Similarly – the argument goes – it is permissible to include footage from other people’s movies in your documentary if you are illustrating a point about the other person’s film that you need to show to your viewer. You can also copy ideas or styles if you are parodying them.
Fair use has been extended to include use of copyrighted material in a learning situation – showing parts of a film in a class, reproducing a copyrighted photograph in a school paper on the subject, etc.
Fair Use is not a law, but a legal principle that can be used in court. It is still possible to be sued for copyright infringement even if you feel you have a good case for Fair Use. Ultimately, many situations need to be decided in court, and it is up to a judge or jury to determine what is or isn’t fair use.
Negativland, and many other critics, have suggested that Fair Use be extended to include all “transformative acts” of remix. In a sense, every repurposing of other people’s work is a “critical” response to that work.
I would invite you to distinguish between the following brands of appropriation. Notice that some are “transformative” (creative) and others merely passive and exploitative:
Quoting someone else’s creation to make a point about it. [creative]
Presenting someone else’s creation as though it is your creation. [not exactly passive, but not really “creative” and definitely exploiting someone else’s work without them getting credit of any sort]
Using part of someone else’s creative production as part of your production. [creative]
Making, sharing, or downloading a digital copy of someone’s digital creation. [passive, but non-exploitative – not for profit]
Making an exact copy of someone else’s copyrighted creation and selling it for profit. [passive and exploitative]