I'm a little behind this story, but yes, the AP acted like goons when they threatened the Drudge Retort with a lawsuit over fair use. I would imagine it was some of their lawyers hunting around the Internets to see if any websites were copying their material. Unfortunately, they got a little trigger happy and attacked a blogger for nothing.

The A.P. took an unusually strict position against quotation of its work, sending a letter to the Drudge Retort asking it to remove seven items that contained quotations from A.P. articles ranging from 39 to 79 words.
On Saturday, The A.P. retreated. Jim Kennedy, vice president and strategy director of The A.P., said in an interview that the news organization had decided that its letter to the Drudge Retort was "heavy-handed" and that The A.P. was going to rethink its policies toward bloggers. The quick about-face came, he said, because a number of well-known bloggers started criticizing its policy, claiming it would undercut the active discussion of the news that rages on sites, big and small, across the Internet

Jamie emailed this story over when it first hit on Slashdot, but I didn't have a chance to post this yet. I've always been treated fairly by the AP so it was surprising to see them act like this, but give someone a new internet tool to play with and you wind up with idiotic threats. As KOS said earlier they now are backtracking a little bit:

The AP is going to lecture bloggers about what the "spirit of the internet" is all about? Laughable. And the AP certainly doesn't have free reign to rewrite copyright law on its own. Fair use provisions.

Hahahaha, OK, sure. Good luck with that, AP, I think it's really about trying to save face on their part at this time, but they walked right into a buzz saw. Look what they got themselves into.

Duncan adds this...

More to the point, as Glaser realizes in an update, the AP is full of sh*t here and there's nothing to talk about. If they want to take this to court, they can, but there are no guidelines to be negotiated here. They don't write copyright law or get to determine its precise boundaries. It isn't for them to determine what is legal fair use and what isn't.

More KOS:

Lots of blogs are calling for boycotts of AP content. Not me. I'm going to keep using it. I will copy and paste as many words as I feel necessary to make my points and that I feel are within bounds of copyright law (and remember, I've got a JD and specialized in media law, so I know the rules pretty well). And I will keep doing so if I get an AP takedown notice (which I will make a big public show of ignoring). And then, either the AP -- an organization famous for taking its members work without credit -- will either back down and shut the hell up, or we'll have a judge resolve the easiest question of law in the history of copyright jurisprudence.

I think all bloggers, including myself will take them on if it comes to that. Is that what they really want? And Steve Hansell at The NY Times says that bloggers got a little hot headed.

A number of bloggers I respect a great deal didn’t find the A.P.’s openness to their ideas to be enough and have declared war on it. As someone who is both a blogger and an employee of a mainstream news organization, I worry that this hotheaded response is part of what gives blogs a bad name.

He doesn't get the fact that a bloggers would be worried about being attacked by a huge corporation. No, that wouldn't upset Steve. Yea, if he got that legal notice and didn't have the backing of the NY Times---how he would feel? Cernig has more...

The Media Bloggers Association is going to talk with them, but bloggers will be bloggers....

Please add more in the thread below since I've been posting all day and haven't kept up with the story....