Copyright laws

Unfortunately, I was sick so I could not attend the lecture. However, while taking the online copyright quiz, i learned that there is a law that allows the usage of a work without having to cite it. Called Fair Use, it allows for the reasonable use of copyrighted materials in specific circumstances.
These circumstances are somewhat vague, and have often been used to justify copyright infringement. For example, say a high school history teacher mad copies of the movie "Saving Private Ryan" and distributed them to his class. The teacher would argue that it was for an educational purpose, which is acceptable under Fair Use. However, the studio that produced it would argue that the teacher is infringing their rights. In this case, I would have to say that Fair Use does not apply. When the teacher copied and distributed the movie, the studio was denied any payment for the new copies. As the producer, they have a right to collect royalties for the first distribution of every copy of their movie.