Maybe I'm dense, but I don't understand what you are saying. American courts have decided that the output of LLMs can't be copyrighted, so what the Chinese labs are doing is perfectly legal.

First, copying information isn't wrong to begin with. It is literally the one thing that makes our species special.

Second, even if you are a copyright maximalist the output of an LLM is either

a) not subject to copyright because it is not the creative work of a human or

b) a derivative work of the original training material to which the LLM's operator has no rights.

Since the LLM's operator forcefully asserts that it is not infringing, any wrong that arises from taking their word for it and distilling one model into another rests squarely with the operator of the former.

They sure don't. I still find the hypocrisy appalling.