I do wonder whether that will become accepted case law, assuming something like that is argued in the NYT suit.
“Bathed in the soft hues of twilight, the sleek feline, with its fur a tapestry of midnight shades, beheld an approaching canine companion. A symphony of amber streetlights cast gentle poles of warmth upon the cobblestone path, as the cat’s entered eyes, glinting with subtle mischief, looked into the form of the oncoming dog- a creature of boundless enthusiasm and a coat adorned with a kaleidoscope of earth tones”
Since an AI has produced the latter from the former, there is no meaningful transformation.
In law, in the eyes of those that want AI to "win", or in the eyes of those who want AI to "lose"? For all three can be different. (Now I'm remembering a Babylon 5 quote: "Understanding is a three-edged sword: your side, their side, and the truth.")
I don't much like that laws seem so messy either, but that just doesn't seem like much of a reason to think it won't shake out like that.
The law may well start on the basis of what people feel, and work outwards from there to things that might, or might not, be actually enforceable. And the headline summary of that law may or may not have much in common with the details, which is why e.g. the USA PATRIOT Act has that name.
Likewise "write a novel in the style of Terry Pratchett"
So even if your desired system were implemented to a T, you could hire someone to write a dozen or so examples of Terry writing. Probably just 30 or so pages of highly styled copied text, and then train your bot on this corpus to make “Not Terry” content. Boom. $100 on gig author and then for all practical purposes the Terry style is legally open source. Terry doesn’t even get the $100!
Saying "a-HA! But my automated process can produce something that looks much like what your human would!" does not negate that; it merely makes it hard to tell the difference at a glance—which we already know to be the case.