Oh, it’s very much possible to create AI models with copyrighted materials. The “impossible” part is turning said AI model into a cash cow without fairly compensating the original rights holder.
In that case there would be some separate DB used to identify copyright material that it cannot use when generating art. Hopefully with drastic sanctions if it arises that it is in the LLM.
Alternatively, we can go back to literal Youtube and rely on DMCA yet again. I don't think anyone desires that.