10 years ago (OHGODS it’s been that long), when I was going through art school, the professor of my digital art classes made the case that if you change a photograph or piece of art enough it’s now your work and copyright law doesn’t apply. But he said enough was up for debate. It’s still up for debate, considering how often companies like Getty Images are caught trying to sell copyrighted photos (by other artists) that they haven’t changed. It was ambiguous 10 years ago, I don’t think it’s come much further since.
Eric Franklin is definitely correct: our laws haven’t caught up properly in regards to digital manipulation, digital art, and other forms of software.