> I imagine that Disney would take issue with SD if material that Disney owned the copyright to was used in SD. They would sue. SD would have to be taken off the market.

Are you sure?

I'm not familiar with the exact data set they used for SD and whether or not Disney art was included, but my understanding is that their claim to legality comes from arguing that the use of images as training data is 'fair use'.

Anyone can use Disney art for their projects as long as it's fair use, so even if they happened to not include Disney art in SD, it doesn't fully validate your point, because they could have done so if they wanted. As long as training constitutes fair use, which I think it should - it's pretty much the AI equivalent of 'looking at others' works', which is part of a human artist's training as well.