alt Hacker NewsThe judge found their use is fair use. They are paying not for their use of the content, they are paying for using illegal copies of the content.
The same principle can be applied to distillation - it is a fair use. You just shouldn't use illegal ways to access the models being distilled.
To the commenter below: if it is illegal - has the police/FBI report been made? Otherwise it is just a civil court matter.
Fair, but isn't "illegal" access what they're talking about in OP?
It does seem to be becoming the norm for AI companies to licence premium content in America, judging by the deals they're making. It doesn't seem to be done by the international distillers. It's a cost that American open models will seem to have to pay but not international.