The “sin” of physicalism goes as far back as IP. Some examples that pop to mind are:
Boulton & Watt v. Bull (1795): all the judges but one cannot bring themselves to recognize the concept of a method patent because of the lack of physicality of such subject matter.
Or if you want to go further back: the use of 17th century English stationers of the term “copy” as a quasi-physical object of property.
But yes, in modern American copyright law MAI and RAM copies is certainly a major highlight.

1.The argument is NOT that there is no reproduction or that copies are not made. Of course, there is. The argument is that such reproduction is not-infringing because it does not involve any copyrightable subject matter which is expression and expression only. Just as the copying in Nichols was not infringing because it involved using only unprotected “ideas.”

2.Once the argument is understood, the only distinction from cases like Nichols is that here, as a physical matter, the whole “work” is reproduced. But this is exactly the physicalist fallacy. Mere physical objects or acts that have nothing to do with the use of expression qua expression are not within the domain of copyright.

3.The physicalist fallacy is widespread in copyright and IP more generally. Think not only digital fair use referred to by Chris, but also the RAM copies debacle. The latter Jessica Litman very appropriately called “copy fetishism.”
For the ubiquity of the physicalist fallacy in IP generally and the need to avoid it see Talha Syed’s brilliant article on Reconstructing Patent Eligibility. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3699014

See also Abraham Drassinower in his excellent book The Problem with Copyright (the subject matter of copyright is not stains of ”ink on a piece of paper”), and Remarks on Technological Neutrality in Copyright Law as a Subject Matter Problem: Lessons from Canada. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4099720

4.Since the issue is one of copyright’s subject matter, the correct conceptual tool for analyzing it is copyright’s subject matter principles. And the comparative advantages of using the correct conceptual tool is not just the practical ones of a more administrable and procedurally-friendly to defendants doctrine, but also much more importantly: far better fit between the relevant concepts and their purpose and the substantive issue at hand. Hence the article’s argument may be good or bad, but it is anything but “doctrinal.”

5.At the same time, the argument is decidedly not about “policy” (of fair use or otherwise). It is not about this or that specific “policy” as applied to the GenAI context. It is about the most fundamental concepts of what copyright is about understood (as they must be) in light of their purpose. The whole theoretical assumption of the article is that there is such a thing as legal concepts, that are important and distinct from both: a) “doctrine” in the sense of either endlessly manipulable technical rules or formalistic norms that carry their own meaning with no reference to purpose, and; b) context-specific policies, as opposed to much more general and basic purposes that are indispensable for giving meaning to concepts. In this case the relevant concepts are those of subject matter, their purpose is to designate the field’s informational domain (expression and expression only!). And much follows from taking these concepts and their purpose seriously both for the GenAI infringement debate and more generally for IP (see (3) above). Not the least by way of dispelling very common misunderstandings and confusions that haunt IP.

Shoutout to Prof. Talha Syed from Berkeley Law- who is cited in the paper and even referenced in the talk for developing this point on de-physicalising as a tool of dereifying IP law in context of patent theory in his wonderful piece- Reconstructing Patent Eligibility- https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3699014

It’s hard to see the relevancy here of neuroscience. And the point has been missed here it seems:

For the intent of the lawmaker, wasn’t only to encourage creativity, but also to protect those creative persons (emphasizing: to protect).

So, parasites and wrongdoers, wouldn’t profit from the harsh work and investments of others. That is why the threshold is so low (beyond the issue of domains. While patent rely rather on mechanisms, copyright can be attributed to: writing, movies, theatre etc…every domain almost).

So, understanding the intent of the lawmaker, is crucial here.

Thanks