There's way too much hand waving on this topic. It is legal to produce copywritten work. If I draw Pikachu the drawing is mine. Legally. I am simply unable to make money on it. I can give it away if I want with zero liability. I could even hang the drawing up in my restaurant as a decoration. No big deal. What I can't do is use that drawing as my mascot or branding. We have an entirely separate process to determine if you are infringing on a copyright / trademark by using it to sell something. That's why whether or not an LLM can produce a picture of Pikachu is largely irrelevant. It's what you do with it that matters. Even more interestingly if I draw a picture of Pikachu and then the Pokemon Company decides they wanna use that specific picture they actually would have to pay ME for the copyright to use it.