>Things algorithmically generated from a copyrighted work constitute derived work.
This is a very strong statement that is not, at least to me, obviously true. I am curious what your argument is - learning from a copyrighted work does not automatically make a work derivative.
These models do not store copies of images they learned from, or attempt to replicate these images. They learn about constituent parts and assemble them based on the prompt, which is not conceptually all that different from how humans do the same thing.
There are obviously moral questions and legal questions around AI art, and I expect that we will see more, but I'm not sure that this statement is accurate.
This is certainly the legal question of the hour, and it may allow courts to sidestep the equivalence problem to apply different rules to humans than to AIs. History is replete with courts deciding that the rights of some minority don't count because they are deemed different (or less) in some way. Might as well get started with AIs right away. Might as well make sure that when AI is eventually demonstrably sentient there are already tons of established laws and billions of dollars that says they are not.
It seems to me that you cannot take someone's art and plug it into an empty model: we have to start with a model that has been trained on a huge corpus of art, and only then can you show it some pictures and ask it to imitate. This is no different than a human. But my opinion does not matter at all. All it requires is that a jury says "This is an algorithm, therefore it is derivative."
Obviously if the thing is as complex as an AI model it might be hard to prove that a copyrighted work was among the inputs.