> Distillation is not illegal by every definition of the word.

I am waiting for a precedent on this one. In general, training on copyrighted material is legal, there is a lot of precedent there. But every now and then there is a case where the owner of the training material wins.

I don't remember the details but I believe one of these instances was when one company trained its AI on the knowledge base of another company and turned it into a competing product. Fair use was denied because of that direct competition. Distilling a LLM to make a competing LLM looks kind of like this, or maybe not, I don't know.

It would make sense for distillation to be legal in every way, LLMs are built on a broad interpretation of fair use, but sometimes, law is weird.

> I am waiting for a precedent on this one. In general, training on copyrighted material is legal, there is a lot of precedent there. But every now and then there is a case where the owner of the training material wins.

You're making a fundamental assumption: that model outputs are subject to copyright. In the US that's only the case if a human is part of the creative process:

https://www.copyright.gov/newsnet/2025/1060.html

> It concludes that the outputs of generative AI can be protected by copyright only where a human author has determined sufficient expressive elements. This can include situations where a human-authored work is perceptible in an AI output, or a human makes creative arrangements or modifications of the output, but not the mere provision of prompts.