The painting was based on an AP photograph taken in April 2006 and featured prominently on buttons, posters and websites during Obama's campaign.
Now two weeks after Obama's official inauguration, AP claims that it owns the copyright to the image.
Paul Colford, the AP director of media relations, said in a statement: "The Associated Press has determined that the photograph used in the poster is an AP photo and that its use required permission.
"AP safeguards its assets and looks at these events on a case-by-case basis.
"We have reached out to Mr Fairey's attorney and are in discussions. We hope for an amicable solution."
Fairey's lawyers say that the artist is protected through "fair use" legality.
The Obama campaign has said that it fully knew the painting was based on an AP photograph but failed to acquire a license the original image.
Fairey said he found the photo using Google's Image search and has not received any sort income because of the painting.
The painting itself will be exhibited at the Institute of Contemporary Art in Boston this month and a different version will be displayed at the National Portrait Gallery in Washington.