This is what I hope comes out of the lawsuit. If a company wants to sell an AI model, they need to own all of the training data. It can't be "fair use" to take other peoples' works at zero cost, and use it to build a commercial product without compensation.

And maybe models trained on public data should be in the public domain, so that AI research can happen without requiring massive investments to obtain the training data.

It being permissively licensed is virtually irrelevant because only a minority of code is so permissively licensed you can just do what you like under any license. Far more is do what you like within the scope of the license. For example GPL do with it what you like so long as any derivative work is also GPL.

I guess I'm just afraid that it might not be as good as it is that way.

It's a bit like how GPT-3, Stable Diffusion and all those generative models use extensive amounts of copyrighted material in training to get as good as they do.

In those cases however the output space is so vast that plagiarism is very unlikely.

With code, not so much.