Let's start with I think a case that everyone agrees with.
If I were to take an image, and compress it or encrypt it, and then show you data file, you would not be able to see the original copyrighted material anywhere in the data.
But if you had the right computer program, you could use it to regenerate the original image flawlessly.
I think most people would easily agree that distributing the encrypted file without permission is still a distribution of a copyrighted work and against the law.
What if you used _lossy_ encryption, and can merely reproduce a poor quality jpeg of the original image? I think still copyright infringement, right?
Would it matter if you distributed it with an executable that only rendered the image non-deterministically? Maybe one out of 10 times? Or if the command to reproduce it was undocumented?
Okay, so now we have AI. We can ignore the algorithm entirely and how it works, because it's not relevant. There is a large amount of data that it operates on, the weights of the model and so on. You _can_ with the correct prompts, sometimes generate a copy of a copyrighted work, to some degree of fidelity or another.
I do not think it is meaningfully different from the simpler example, just with a lot of extra steps.
I think, legally, it's pretty clear that it is illegally distributing copyrighted material without permission. I think calling it an "ai" just needlessly anthropomorphizes everything. It's a computer program that distributes copyrighted work without permission. It doesn't matter if it's the primary purpose or not.
I think probably there needs to be some kind of new law to fix this situation, but under the current law as it exists, it seems to me to be clearly illegal.