Wouldn't AI generated artwork be protected under fair use since it's not an identical replica of the copyrighted material but an altered version that references the source material?
Kind of like how reaction YouTube videos are allowed to use clips of the original content, as long as they contribute something new as well then as a whole the reaction video becomes new content.
Fair use laws are region-specific and have limitations. Also does not really cover what a NN does, as they usually aren't designed to make a derivative work or reproduction.