So under U.S. law, the more "transformative" something is (as opposed to "derivative"), the more likely it is to be deemed fair use. The line between derivative and transformative is fuzzy but generally, something like a movie adaptation of a book is derivative whereas parody is transformative.
Given that, suppose I have a cat pic. Google creates a thumbnail of that cat pic, which is, by itself, obviously derivative. But Google includes my cat pic alongside many other cat pics in response to a query for cats, the thing as a whole starts looking more transformative.
Now suppose my cat pic gets sucked into a generative AI. I suppose it could be used to create a merely derivative copy of the original cat pic, albeit with reduced quality, like a thumbnail. But the whole point of these models is to recombine features from millions of images to create something unique. That is, if I tell the model to draw a cat, it combines features from thousands of other cat pics. Which seems at least as transformative as simply showing the same cat pics in a grid.
From an ethics standpoint, the main difference between Image Search and a generative AI is attribution. Google Image Search is just links whereas Stable Diffusion is sort of opaque about its sources. But attribution isn't one of the factors of fair use -- a parody which makes fun of the original without ever directly identifying the original is still parody.
That said, I suppose you could argue it affects the economic impact of the copying, one of the other fair use factors -- it seems plausible to me that AI generated images impacts the market for, say, Getty images in a way that does image search does not. But it's anyone's guess how a court would balance those two things -- courts very often pretend all of the fair use point one way to discussing how factors are balanced.
The key aspects that the supreme courts in the US looked at when they decided on the author guild vs google, was if the use of the work supersede, supplant or become a replacement for the original works. They also looked if google sold portions of the copies, and if the activity enhanced the sell of the original work for the benefit of the copyright holder.
Some parodies has been found as non-fair use when they supplant or becomes a replacement for the original work. People often get upset when that happens with head lines like "they are outlawing parody!", but from the laws perspective the outcome of a situation is actually very important when determining fair use. In the general case, parodies do not replace original works so the law works generally fine. I guess one could also view it as a transformative work in general do not supplant the original work, while a derivative usually do. A generative AI version of grumpy cat might behave more like a derivative than a generative AI version of a generic cat, even if both are using the same technology.
> Stable Diffusion and other AI models however create unauthorised derivative works.
This is a conclusion of law for which neither relevant facts nor legal analysis reaching the conclusion from the facts is presented. Its not even clear what the alleged “unauthorized derivative works” would be; it clearly can’t be images created by the model through prompting alone, since the copyright office determination that they lack the requisite human creativity to be works within the scope of copyright law necessarily means they cannot be derivative works.
I don't think there's a point in law that makes ML models more of a violation than thumbnails are. For one thing, they're a lot more transformative, so thumbnails actually seem worse here.
That's US law, of course. EU law (which Stable Diffusion 1.x was created under) simply explicitly says ML model training is legal for research purposes, so the question is more about providing it as a service.
Can you point to where in the Copyright Law of 1976 (which was the codification of the fair use doctrine) it states that an AI creating new images after being exposed to copyrighted images during training means the new images are "unauthorized derivative works" even if they do not resemble the original copyrighted image?
(Let me remind you that what the act states is that fair use explicitly applies to, but is not limited to: "criticism, news reporting, teaching [emphasis mine], scholarship, or research purposes.")
Or perhaps you can point to settled case law on the subject?
