I think what’s clear is that this is an unprecedented type of use. I’m really interested in seeing how the courts rule on this one as it has wide implications for the AI era.

Because this use is unprecedented, as you say, it's clear that the law wasn't written with this use case in mind. The more interesting question in my mind is what we think the new law should be, rather than what the courts happen to make of the existing law. I.e., I think the answer should come from politicians not from judges.

If not done extremely carefully, it also has wide implications for human artists