You should point them at Righthaven's (non) case. It's absolutely true that only the copyright holder can issue a takedown and its also true that you can't assign copyright to a lawyer for the purposes of suing people.
I also think the precedents from some of the Righthaven cases would bolster your case that you're use was covered by fair use (at least according to one judge :-)
> It's absolutely true that only the copyright holder can issue a takedown and its also true that you can't assign copyright to a lawyer for the purposes of suing people.
The way you worded it before, you made it sound like you couldn't sue over a copyright that was transferred to you. I don't believe that's true.
What is being said in the Rightshaven case is that you can't transfer just the right to sue without giving them any of the exclusive rights protected by copyright. I believe that, had they transferred the whole copyright, or at least some of the exclusive rights protected by the copyright, Rightshaven would have had standing to sue.
In short, I believe that bluedanieru's formulation is the correct one. IANAL, though, and this kind of stuff turns on hair-splitting interpretations of words.
What about "only the copyright holder has legal standing to file a suit for infringement" and "you can't transfer the right to sue, exclusive of other rights"?
The holding was that you can't transfer just the right to sue. But my understanding is that you can transfer rights less than full ownership (but more than the bare right to sue), and it'll still be enough to confer standing.
I also think the precedents from some of the Righthaven cases would bolster your case that you're use was covered by fair use (at least according to one judge :-)