The point I'm trying to make is a point of clarification as you seem to have a misunderstanding of what transformative means w.r.t. Fair Use since your post [1] talks about comparing the differences between the source work and the AI work to determine transformative.
A derivative work is typically what the generative AI produces where you could see elements of an original work but there are changes (i.e. the source work but shaded purple).
A transformative work may be literally the source work but used in a different context/purpose (i.e. a 5s clip of a 2h soccer game used to show proper throw-in technique as opposed to the original purpose of a sports game).
In the big picture, I expect generative AI to replace stock imagery and in this area I think this court case throws a huge wrench into that. If you're licensing generative AI instead of licensing the source stock imagery this case is going to be cited as why what you've done is illegal.
I take issue with “generative ai produces where you see elements of an original work but there are changes”. Generative AI does not take the pixels of the original work and collage them together. You have go out of your way to tell something like SD to take the input picture and shade it purple. Generative AI isn’t even the right tool for the job as that’s better done in photoshop.
Because this case stands for the proposition that when you make a derivative work, you cannot use it in the same way the original was used, for the same purpose, and call it transformative. The transformative prong of the fair use analysis is one of the most crucial prongs (if not THE most).
