Copyright Acts in fair dealing jurisdictions enumerate what uses of copyright material are not infringements if the material is dealt with fairly (generally without actually defining fair dealing). For example, in australia, fair dealing can be argued if the use is for:
criticism or review;
parody or satire;
personal research or study;
judicial proceedings or professional advice; and
access by a person with a disability.
If the use is outside one of those categories it is never fair dealing. However, even if it is within those categories the use must still be "fair".
There are no prescribed categories of use that are presumed to be fair. Instead, use is assessed against the ‘fairness factors’:
the purpose and character of the use;
the nature of the copyright material;
the amount and substantiality of the part used; and
the effect of the use upon the potential market for, or value of, the copyright material.
Fairness factor 1: the purpose and character of the use
This essentially comes down to whether the use is ‘transformative’ – that is, whether the secondary work adds something new with a further purpose or different character by way of a new expression, meaning or message. The transformation can be physical, purposive, or both.
Fairness factor 2: the nature of the copyright material
Relevant to this inquiry is whether the original work was unpublished, as authors have a right of confidentiality and to first publication, including the timing and form of publication. Reproduction of works of a factual nature may be more easily justified under this limb.
Fairness factor 3: the amount and substantiality of the part used
As a general principle, the more that is copied, or the more of the important part that is copied, the greater the likelihood that the secondary work will become a substitute for the original and reproduction will be harder to justify.
Fairness factor 4: the effect of the use upon the potential market for, or value of, the copyright material
Here, the copyright holder’s right to licence their work and create derivative works is relevant. A secondary work that usurps either the market of the original work or a derivative market tends to cause greater harm to the copyright holder, in which case reproduction becomes more difficult to rationalise.
Thanks to Justine Munsie and Tara Koh
Flexibility vs uncertainty
Because fair use is judged on a case by case basis, it's more flexible than fair dealing and capable of being readilly applied to new technologies and modes of expression. The flipside is that it is less certain whether any particular use is fair use; the 'bright lines' of fair dealing make this less of a problem.
However, in practice, any use that is fair dealing is almost certainly fair use but the reverse is not true. Fair use is broader and encompasses areas that are simply closed to fair dealing.