The scope here is not limited to “can someone legally get in trouble under current law” (which, seems likely but is still working its way through courts). The discussion is specifically discussing ethics. Person C has created nothing. They should have no product to sell, if not for persons A and B. Their competition with those that their product is derived from is a parasitic relationship, plain and simple. They are performing an act of exploitation with measurable harm both to persons A and B but also to further development of their craft by destroying any incentive to continue it.

Now, in some sort of alternate economic system, where one’s livelihood is not tied to their vocation, sure, it’s possibly not problematic because the economic harm is removed. However, in current capitalist systems that are in place where LLMs are heavily hyped, it’s an ethically bankrupt action to take.

ETA: No amount of mental gymnastics can change the fact that use of others’ works without their consent to train a model, then claiming authorship and competing IS plainly theft of the labor that went into creating the original works.

That’s not too say that LLMs and they like don’t have value or often require effort to produce something worthwhile. Just that they need to be used in an ethical manner that improves the human condition, not as another tool to rob others of the fruit of their labors.