This is not what happened. They never were granted the rights to sublicense it. It is in the public domain. They can use it, redistribute it, or charge you if you somehow use their services to do things with it, or even create derivative works which they then own. But they cannot relicense it or claim they own it, or represent the owner.
Now, the only thing I would let them bring forward as their argument is if they themselves were defrauded by somebody claiming ownership of the photograph. I see no indication that this is what had happened, tho.