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.
Obviously some fairy reputable organisations and individuals are moderately confident that there isn't otherwise they wouldn't have done it.