This is very definitely a case of copyright infringement. The copyright, which came into existence at the moment the photo took tangible form, can be registered at any time even AFTER the infringement. The plaintiffs just have to be sure the registration is in place by the time they are heard by the court.
The original poster asked if this was fair use - that implies a copyright issue.
You bring up issues outside of fair use/copyright use.
The issue of legal defamation is far beyond 'my pay grade' and probably should be outside the scope of this forum.
My reason for mentioning all that was merely to highlight the fact that, when you use an image without permission, you potentially open up a knarly can of worms.
Suffice to say that use of that image was a no-no on many levels.
Yes, I realized you have 5 years to formally register an image in the US; what I'm NOT sure about is how this affects infringement issues that happen before the formal registration is made.
Regarding copyright, it exists the instant a photo is made, no claims or registration are necessary to enforce copyright, registration simply helps establish ownership in the event of a dispute.
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