Technology
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I think the place we haven't quite gotten to yet is that copyright is probably the wrong law for this. What the AI is doing is reverse engineering the authors magic formula for creating new works, which would likely be patent law.
In the past this hasn't really been possible for a person to do reliably, and it isn't really quantifiable as far as filling a patent for your process, yet the AI does it anyway, leaving us in a weird spot.
US patent professional here
Ya, saying it isn't possible to do under patent law is no understatement. Even making the patent applications possible to allow would require changes to 35 U. S. C. 112 (A, and probably also B), 35 U. S. C. 101. This all assumes that all authors would have the time and money and energy to file a patent, which even with a good attorney is analogous to is many many hours of work and filing pro se would be like writing a whole new book. After the patent is allowed the costs of continuation applications to account for changes in the process as the author learns and grows would be a hellish burden. After this comes the 20 year lifespan of a patent (assuming all maintenance fees are paid, which is quite the assumption, those are not cheap) at which point the patent protections are dead and the author needs to invent a new process to be protected. Don't even get me started on enforcing a patent.
Patent law is fundamentally flawed to be sure but even if every author gets infinite money and time to file patents with then the changes needed to patent law to let them do so would leave patent law utterly broken for other purposes.
Using patent law for this is a good idea to bring up but for the above reasons I don't think it is viable at all. It would be better and more realistic to have congress change copyright law than to change patent law I think. Sadly, I don't think that is particularly likely either. :(
Can't they just create a brand new law, specifically to cover these use-cases we have here?
Edit: And thank you for your detailed answer! It was educational.
They could and imho (I'm not an expert on this) they probably should. This would fall under unfucking copyright though, or perhaps under a new thing along side copyright and patent law (though that sounds like more work than updating copyright law). Amending it into patent law would be the toughest option. The simple answer as to why I think that is that the vibes are off.
As a rough analogy it would be like combating public flashers by changing the rules for the department of transportation rather than the criminal justice system (ignoring how fucked the criminal justice system is).