After watching the video I think the lawyer and the plaintiffs are making a mistake. Both appear to be shifting away from the fundamental copyright infringement made during the data scraping stage, and instead focusing on to the "latent images" and the "derivative images" made within the AI algorithm.
I say this because I don't think "derivative images" will be a convincing argument for the courts. After watching copyright cases over the years, courts have become (in my opinion) far too lenient when applying the concept of "transformative use" to an infringement which was eventually deemed permissible under the "fair use defense"
Based on what has been considered "fair use due to transformative use" in the past (Cariou V Prince being a particularly blatant example https://en.wikipedia.org/wiki/Cariou_v._Prince) I would expect courts to allow the AI Images to continue.
This is as compared to the Google V Authors Guild (https://en.wikipedia.org/wiki/Authors_Guild,_Inc._v._Google,_Inc.) in which huge data scraping occurred BUT it didn't significantly impact the authors or publishing business.
I don't think that will be the case with AI Images. The industrial-scale copyright infringements here WILL directly affect artists, image makers and other creatives.