UnderDriven: The key issue here is that this was a photo of a work of art, not some buildings on a street. The artist deserves to be compensated if someone else is making a profit from his work. This also applies to photographers who are the creators of the art work (not taking a photo of someone else's art).
As to whether the government should own the rights to monuments, if the contract was written in their favor they would own the rights. However, if the government makes contracts which does not give them the rights, too bad. In any case, had the government negotiated with the correct copyright holder up front they would have had to pay a lot less--again, they blew it and they have to pay.
The photographer didn't do anything wrong. The real culprit was Mr. Lecky of Cooper-Lecky Architects who claimed to own the copyright. None of this would have happened if he had not falsely claimed ownership. He should be sued, but greed is probably not sufficient grounds, unfortunately...
According to Wikipedia (taken from Title 17 of the United States Code): "First, when a building is ordinarily visible from a public place, its protection as an 'architectural work' does not include the right to prevent the making, distributing, or public display of pictures, photographs, or other pictorial representations of the work."
PeterAustin: Was Gaylord entitled to the sole copyright? Things to consider are: The basic design to the memorial was given to Gaylord, and so was the concept for a Korean War memorial (the court found that this context was significant in denying fair use, but that context was given to Gaylord). Also, others were involved in creating the memorial. If Gaylord creation is seen as a contribution to collective work, is it work for hire? Lastly, as a photographer, I disagree that the snow on the statues is solely "Nature's decision" and its depiction not a transformative act by the photographer. I disagree with this notion. There is no question that the choice of snow cover and lighting was a deliberate artistic decision by the photographer, involving a fair amount of creative effort. The court ruled that the creative component of the image was an act of God and not of the human mind. The ruling states first that Alli's copyright as a derivative work is not questioned, only to deny it later.
It may depend on whether Alli was a professional photographer or just a hobbyist, at least in the eyes of the court. A professional photographer (especially a highly regarded fine art photographer) would be more likely to be believed to have added some value to the original work. I'm not saying that an amateur couldn't add value, but perceived expertise does matter in a court of law. The brief doesn't state whether Alli was an amateur or a pro.
If Alli was suing for a part of the copyright that would have been an interesting case (forcing the court to decide how much "value" is added through a photograph, if any). However, Alli was not involved in this case (other than as a witness) so there was no choice but to give Gaylord all the credit. Unfortunately for Alli, he already made a deal with the government and with the person who he thought owned the copyright so he has no legal options...
The key issue here is that this was a photo of a work of art, not some buildings on a street. The artist deserves to be compensated if someone else is making a profit from his work. This also applies to photographers who are the creators of the art work (not taking a photo of someone else's art).