Hi craigw08,
You mention the fair use doctrine. This is a concept under US copyright law and so if you are based in the USA this would be the correct law to follow. However if you are based in the UK or a European Union member state, we need to look at the issues raised in a different context. For the UK that would be the fair dealing exceptions which specific prescribed usages.
Fair Use. So first let's look at situation with regard to US copyright law. The releveant bit is section 107 of the Copyrigfht Act 1976.
§ 107 Notwithstanding the provisions of sections 106 and 106A, the fair use of a copyrighted work, including such use by reproduction in copies or phonorecords or by any other means specified by that section, for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright. In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include—
(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;
(2) the nature of the copyrighted work;
(3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and
(4) the effect of the use upon the potential market for or value of the copyrighted work.
The fact that a work is unpublished shall not itself bar a finding of fair use if such finding is made upon consideration of all the above factors.
As you can see from this, section 107 doesn't specifically list quotation as one of the categories of use, although in most cases 'scholarship' is accepted as a broad enough category to include quotation. So assuming this would be the case with your calligraphy, you need to examine you planned use of the quoted piece against the four fair use factors. If the poem etc is currently available in print, I think your use would probably fail on all four counts. Song lyrics from the last 50 years are always going to be problematic, because the music industry is notoriously litigious. Factor one is where you might gain the most advantage because the character of your work would differ from the standard printed form of the poem etc. But it's purpose (ie making the poem available to be read) would be the same. And while it might be argued your version could have educational value (in teaching readers to appreciate calligraphy), this might well be offset by the commercial nature of the transaction via Etsy. Just publishing your work on social media would eliminate the commercial aspect, so factor one might then swing in your favour. The remaining three factors would tend to go against you: the nature would be the same, ie it would remain a poem, song lyric etc*; you would be using the entirety of the poem; and your use would be in direct competition with the same work available in standard print. If you stick to older works which are out of print then the fourth factor would be less dominant. While using song lyrics would in theory compete with sales of sheet music, I suspect the music publishers would be less of a problem than the record companies even though the latter will usually have no direct rights over the lyrics. You can read a bit more about how the four factors tend to be analysed in practice, in
this Wikipedia article.
Fair Dealing. The UK doctrine of fair dealing is outlined in
sections 28 to 31 of the Copyright Designs and Patents Act 1988. For your purposes, the relevant part is Section 30 (1ZA) - quotation:
(1ZA) Copyright in a work is not infringed by the use of a quotation from the work (whether for criticism or review or otherwise) provided that—
(a) the work has been made available to the public,
(b) the use of the quotation is fair dealing with the work,
(c) the extent of the quotation is no more than is required by the specific purpose for which it is used, and
(d) the quotation is accompanied by a sufficient acknowledgement (unless this would be impossible for reasons of practicality or otherwise).
The major obstacle as far as you are concerned is sub-section (c). While this doesn't preclude quoting the whole of a poem or other work, clearly doing so would need to be balanced against the other fair dealing considerations. In this case that would include whether your quotation was 'fair' in respect of the economic rights of the poet, in other words if it effected potential sales of the printed version(s). Song lyrics don't have the same economic value as so few people buy sheet music, and the lyrics are often widely available on the internet anyway, albeit not necessarily authorised. However as already noted, the music industry tend to be much more touchy about any kind of perceived infringement, even though the actual economic threat may be minimal or non-existant. And to qualify for the fair dealing exception, you would most definitely need to include a credit, as you have noted.
So to summarise, the commercial Etsy service is definitely problematic on both sides of the Atlantic, especially where a poem is relatively modern and so still in print. However the social media use would be less risky, especially if you only use a verse or two, rather than the complete poem. Poems are definitely better than song lyrics, as they are traditionally recognised as quotable works.
*
It is of course possible to argue that your use might be transformative, in that your calligraphic version would be artistic rather than entirely practical. However, at best, this would be unlikely the swing the overall decision on the four factors your way.