Just because it's a scrambled watermark doesn't mean it's transformative.
Also, these images are copyrighted and it being generated by an AI (supposedly) turns it into a public domain image, which is incompatible with fair use.
And where do you draw the line: https://www.lexisnexis.com/community/casebrief/p/casebrief-a....
You're saying it can't be a 1:1 Getty Images watermark but it also can't be generated in a vacuum, so how did that 'recognisable watermark that apparently for some reason resembles a Getty Images watermark but it isn't' get in there?
Either way, under the law, derivative works are still under the copyright holder.
> Copyright protection for the owner of the original copyright extends to derivative works. This means that the copyright owner of the original work also owns the rights to derivative works. Therefore, the owner of the copyright to the original work may bring a copyright infringement lawsuit against someone who creates a derivative work without permission.
https://www.legalzoom.com/articles/what-are-derivative-works...
But here is the kicker, it all comes down to, permission.
https://www.gettyimages.co.uk/eula
> No Machine Learning, AI, or Biometric Technology Use. Unless explicitly authorised in a Getty Images invoice, sales order confirmation or licence agreement, you may not use content (including any caption information, keywords or other metadata associated with content) for any machine learning and/or artificial intelligence purposes, or for any technologies designed or intended for the identification of natural persons. Additionally, Getty Images does not represent or warrant that consent has been obtained for such uses with respect to model-released content.