Yes, the court should rule in favor of Morel as he has a strong case for copyright infringement against AFP. While, yes, Twitpic’s terms of service read, in part, “By [uploading content], you grant us a worldwide, non-exclusive, royalty-free license (with the right to sublicense) to use, copy reproduce, process, adapt, modify, publish, transmit, display and distribute such content in any and all media or distribution methods.” This extends solely to Twitpic as a company. There is no evidence that this is meant to extend to third parties (i.e., AFP) who come across the photo on the platform and wish to use it for their own purposes. Further, because Morel is the copyright holder, he has the exclusive right to control the use and distribution of his artwork unless he grants a license to another party.
It’s worth mentioning that individuals are allowed to post photographs on a public website without automatically granting a license to third parties to use the photographs without permission. McGucken v. Newsweek LLC, 464 F. Supp. 3d 594 (S.D.N.Y. 2020). This ruling seemingly weakens AFP’s defense as they were granted permission before carelessly distributing copies of the photographs to CBS, CNN, and other news outlets. Additionally, from a public policy standpoint, it would be problematic to rule in favor of AFP as it would (1) make artists hesitate to share their work online as they have no defense to stop others from using their art in a way that goes against who they are or what they see as appropriate and (2) leave them without remedy or compensation when larger companies inevitably profit off of their art.