2. He never asked for the license before using it. Only after he was sued did he ask if he could have gotten a license.
3. It was a commercial product.
4. The "compulsory license" does not give rights to do whatever the person wants with it. From the wikipedia page, it gives the right to rearrange the work but not to change the melody or fundamental character of the work. I know that the remix artists 2 Many DJs were not given permissions to create versions of certain songs. So it is most definitely not cut and dry as this claims it to be.
At the end of the day, he created a derivative work to be used in a commercial product without, as a minimum, even asking for permission.