Here are five simple Fair Use Guidelines for copyrighted work that help me focus on the issues.
Your artwork should substantially transform any copyrighted work, i.e. not a copy. The degree of transformation does matter - the less it looks like the original copyrighted work, the better.
2) No Confusion
Your artwork should not be easily confused with the copyrighted work. Consumers especially should be able to instantly distinguish your artwork as something different from the commercial purpose of the copyrighted work.
3) Commentary or Parody
Your artwork should make a comment or parody of the copyrighted work. The commentary may be flattering or critical.
4) Non-commercial Intent
It's OK to sell your artwork, but the artwork should not have a commercial intent that would compete with the commercial purpose of the copyrighted work.
5) No Sponsorship
Your artwork should make no suggestion that the copyright owner endorses or sponsors the artwork.
Ideally, all of these Fair Use Guidelines should be applied to your artwork - but exceptions do occur. Most of this is common sense. Fair Use under copyright law not only permits but is intended to encourage a wide range of possibilities. Be creative!.
Hopefully, for most people, these five guidelines will be a fast and easy reference. If you want further insights, a series of posts on this blog provide examples and links to other reference material.
Stanford University Libraries offers an excellent post on Measuring Fair Use: The Four Factors
If you have information that you would like to add to these Fair Use Guidelines, either comment here or email me.
A lecture given in March 2013 discusses common issues surrounding copyright in the crafts community "The GOOD, The BAD, and The UGLY in the AGE of the Internet."