Fair use has been eroded by the fact that people are afraid of incurring the legal wrath of corporations with deep pockets, and in the American legal system, money trumps everything. Unfortunately, this case isn't likely to change that - if the Jackson Estate wins, it will reinforce the narrow interpretation of fair use, and if they lose, it won't change the cases where Disney has been able to crush the intellectual property rights of others. Though if they do lose, they should do exactly the Star Wars doc they describe in their complaint.

I'd watch that doc.

The damage doesn't look as bad from out here

If Disney owned Bugs Bunny they'd sue you for ending a sentence with "doc".

Release the Kraken, Kraken, & Kraken LLP!

They'll probably settle out of court.

Almost certainly. Going to court is a legal precedent, 'settle' means no fault or legal matter has been filed or can be referred to for future cases.

"The Estate clearly disagrees and notes that Disney's argument would make even the founders of Napster pause. "

Napster? 'Discuss Copyright Law Like it's 1999' is a song from some of Michael Jackson's more obscure catalog, I guess.

It's always been the case that companies are the worse advocates for the free market. A company's ideal market is a market in which it is free and everybody else has the greatest restrictions placed upon them. A free market is merely acceptable, and something to be gamed.