That’s going to be hard to argue. Where are the copies?
“Having copied the five billion images—without the consent of the original artists—Stable Diffusion relies on a mathematical process called diffusion to store compressed copies of these training images, which in turn are recombined to derive other images. It is, in short, a 21st-century collage tool.“
“Diffusion is a way for an AI program to figure out how to reconstruct a copy of the training data through denoising. Because this is so, in copyright terms it’s no different from an MP3 or JPEG—a way of storing a compressed copy of certain digital data.”
The examples of training diffusion (eg, reconstructing a picture out of noise) will be core to their argument in court. Certainly during training the goal is to reconstruct original images out of noise. But, do they exist in SD as copies? Idk
The law doesn't recognize a mathematical computer transformation as creating a new work with original copyright.
If you give me an image, and I encrypt it with a randomly generated password, and then don't write down the password anywhere, the resulting file will be indistinguishable from random noise. No one can possibly derive the original image from it. But, it's still copyrighted by the original artist as long as they can show "This started as my image, and a machine made a rote mathematical transformation to it" because machine's making rote mathematical transformations cannot create new copyright.
The argument for stable diffusion would be that even if you cannot point to any image, since only algorithmic changes happened to the inputs, without any human creativity, the output is a derived work which does not have its own unique copyright.
The idea, in stage one, was to split a file into chunks and xor those with other random chunks (equivalent to a one-time pad), those chunks as well as the created random chunks then got shared around the networks, with nobody hosting both parts of a pair.
The next stage is that future files inserted into the network would not create new random chunks but randomly use existing chunks already in the network. The result is a distributed store of chunks each of which is provably capable of generating any other chunk given the right pair. The correlations are then stored in a separate manifest.
It feels like such a system is some kind of entropy coding system. In the limit the manifest becomes the same size as the original data. At the same time though, you can prove that any given chunk contains no information. I love thinking about how the philosophy of information theory interacts with the law.
Yes, on a technical level, those chunks are random data. On the legal side, however, those chunks are illegal copyright infringement because that is their intent, and there is a process that allows the intent to happen.
I can't really say it better than this post does, so I highly recommend reading it: https://ansuz.sooke.bc.ca/entry/23