Also, I can do this all day long if I am not selling my output.
Also, I can do this all day long if I am not selling my output.
I don't know the details, or enough to have a real opinion on it, but it seems like if you have a system that you can request something from and an input image comes out mostly intact on the other end, that shares a lot of similarities to a database and lossy compression. If that's actually possibly, then I have questions about how much of an original is used in the output even if it's changed, and at what point it becomes transformative.
Again, I'm not sure about most of this, and don't even have the source comment I'm remember, much less their source for their assertions, but I do have lots of questions and suspicions, if indeed what we think we know about these models based on prior statements ends up being wrong in some cases as we learn more.
Transformative refers to how the works of art are used. For example, if I make a compilation of every single Barry Bonds homeruns the clips of the games are copyrighted but the video I produced isn't a substitute for an actual baseball game so the resulting work is transformative even if none of the video footage has been altered.
But certainly the copyright holders would succeed in getting your video taken down from YouTube since it wouldn't be a DMCA request. (Fair Use doesn't mean a private company must host your video).
[1]: https://www.citizen.org/article/a-guide-to-fair-use-in-posti...
A derivative work is typically what the generative AI produces where you could see elements of an original work but there are changes (i.e. the source work but shaded purple).
A transformative work may be literally the source work but used in a different context/purpose (i.e. a 5s clip of a 2h soccer game used to show proper throw-in technique as opposed to the original purpose of a sports game).
In the big picture, I expect generative AI to replace stock imagery and in this area I think this court case throws a huge wrench into that. If you're licensing generative AI instead of licensing the source stock imagery this case is going to be cited as why what you've done is illegal.