> Both labs even explicitly promise the customer owns the outputs.

> to the extent permitted by applicable law, you (a) retain your ownership rights in Input and (b) own the Output

If the argument is that the model itself is under copyright protection then "as permitted by applicable law" would be doing some heavy lifting. Assuming that were true, given that locally-run LLMs exist, what would be illegal: the distillation itself or the provision of service of the distilled model?