At what point does it become lossy enough that it's not protected, though? You can imagine a lossy compression algorithm that merely stores a 1 for images that are "more red" and a 0 for images that are "more blue." Such a compression algorithm would be storing some information about the thing it's compressing, but the closest reconstruction you could get from the compressed data is a red square or a blue square. Surely that's not copyright infringement? What about an algorithm that counts the fingers portrayed in an image and just reconstructs an image with the same amount of fingers? Where's the line?