The issues to consider are copyright infringement and the misappropriation of right of publicity. Your business could be sued by the photographer of each of the photos you use for copyright infringement. You could also be sued by the celebrities for misappropriation of the right of publicity (http://topics.law.cornell.edu/wex/Publicity).

In the scenario presented, you are using some of the language of fair use, i.e., parody etc., but the more of a parody something is, it can be argued that the more likely it could walk into a right of publicity issue.

A reasonable answer to your question may be that you may have to license rights to the photos and the celebs depicted. It would be very risky to count on a fair use defense and the chance and expense of you being sued is high. You should license the rights from a photo stock agency like Corbis or Getty. Taking images from CNN or others' sites may be just …”ahh … to put it mildly … taking something without having the right to do so ☺.”

I have also included links to a couple of websites that may be helpful.

http://www.medialawyer.com/lec-copy.htm
http://www.wipo.int/sme/en/documents/ip_photogr...

Take perezhilton.com, for example, which has gained attention recently not just for real-time updates on some celebs but also for its run-in with copyright law. Among a host of others, it was sued for $7.6 million by a Hollywood photo agency, Universal Pictures, for posting a photo of Jennifer Aniston that was presumably taken from an edited portion of a recent film. Universal Pictures alleges that perezhilton.com failed to take down the photo after notice was served in accordance with the DMCA.

SplashNewsOnline.com, another photo agency, also recently claimed that perezhilton.com refused to take down pictures from its website after receiving their DMCA notice.

Prezhilton.com claims that the use of photos on perezhilton.com is protected under copyright fair use as it is posted for the purpose of commentary and is not “selling” the photos. It is also argued that the photos are “transformed” (although they seem to be “derivative” rather than “transformative”) by showing only portions of them and then at lower resolution. It also appears that the “parodies” involves that of the celebs rather than their images.

It is noteworthy to state that perezhilton.com enjoys some level of commercial success and is reported that it receives 2 million unique visitor hits per month and charges a rate of over $9,000/week for ad space.

Soody Tronson
http://www.foundersspace.com/featured/soody-tro...