Ooh, the US copyright office makes a decision! And, I think, clearly a bad one! :) I should weblog, but I'm too lazy right now.
https://www.reuters.com/legal/ai-created-images-lose-us-copyrights-test-new-technology-2023-02-22/
I did eventually weblog. Just some initial thoughts...
https://ceoln.wordpress.com/2023/02/23/the-us-copyright-office-takes-a-position/
@pre
There is various case law on how much modification is needed to have a new copyrightable thing, and the memo refers to it. They appear to be assuming that the requirements are the same as if the original image was #copyright by the software, and the user was (with permission) creating a separately copyrightable derivative work. I think!
They also address work for hire, but as in Thaler they are denying the theory that the human has the copyright because they 'hired' the software which is the creator -in- fact. That seems a bit Catch 22 to me, and I say a little about that in the weblog.