The Guardian is on top of this story, leading with: AP faces copyright row with bloggers. Seems that the AP has issued a takedown notice to Drudge Retort, a.k.a the left version of Drudge Report. You can read the Drudge Retort founder Rogers Cadenhead's post about it here: AP Files 7 DMCA Takedowns Against Drudge Retort. In at least one case, I can see why the AP were annoyed: "The Retort has received a copyright complaint from a news organization about users who have posted the full text of its articles in their blog entries" - full text is not fair use and never was. But that is not the only organisation the AP is currently after, they also filed copyright lawsuits against the VeriSign division Moreover last fall which contentblogger dubbed: "Mining Disaster: Moreover's Mined Web Content Draws AP Suit". For the legally nerdy the Moreover/Verising lawsuit and the evidence from AP is available in two PDF documents at Paidcontent.org
Agence France-Presse filed a similar suit back in March 2005, arguing that Google was infringing AFP copyright by headlines, news summaries and photos, without the news agency's permission - they settled out of court which "avoided tackling some thorny legal issues about fair use" as Juan Carlos Perez at IDG news services so eloquently put it.
As blogs, and "mining" services such as moreover - or even digg, reddit and other "link + short text" type of communities have been quoting headlines, a bit of an article and linking back to source for years without trouble I doubt AP will get any sympathy. Add to that the AP distributes local news on their wires without linking back to the original local newspaper as source of the report and folks might even call them hypocrites.
In the case of photographs, they already have egg on their face - recall when the AP was distributing "Spitzer Call Girl" myspace photos without permission, something that the Spitzer Call Girl's lawyer didn't take lying down.(sorry).
The web is a tricky thing. Quote (a little) and link has been the norm, and as far as anyone knew the legal way to do things, as long as you left photographs alone. Why hasn't there been a bigger uproar over photographs being reposted, or hotlinked before?
Many moons ago (2004 actually) we were wondering why big old news media didn't react to the hotlinking of images from sites like the Drudge Report, as hotlinking would be a) using an image without permission and b) using the bandwidth of the AP/newspaper server as well. Back then, none of the old newspapers people seemed to care one iota, and as the practice has been going on for years there's few bloggers out there who give hotlinking a second thought. Or if they do, they probably only worry about the image vanishing from the web later.