If you sign a model release this year, read the boilerplate about 'alterations' twice. A New York court just gave us the first real test of whether the old language, written for cropping and color correction, stretches to cover generative AI. On July 16, a New York Supreme Court judge denied model Francheska Pujols' request to immediately stop Rainbow Shops from running AI-altered images of her, and on July 8 Rainbow filed a memo arguing that its 2024 model release already gave it the right to do exactly what it did. This is not a footnote. It is the first time a court has been asked, in plain contract terms, whether a 'minor edits' clause can absorb a technology nobody had in mind when the ink dried.
The claim
The case is Pujols v. Rainbow Shops, Inc., 157543-2026, pending in New York County Supreme Court. Pujols shot a catalog job for Rainbow in September 2024 against a plain white background. She says that months after her contract expired, the retailer used AI to place her recognizable likeness into new scenes, poses, and outfits she never posed for, some of them sexualized, and kept running them after she sent a cease and desist letter. Rainbow's release permitted certain modifications to existing photographs, but did not authorize the creation of entirely new AI-generated depictions, altering features such as hair, clothing, body positioning, backgrounds, poses, and visual compositions. Rainbow disagrees, and its argument is the interesting part. In a memo filed on July 8, Rainbow frames the case as turning less on AI than on the terms of the parties' existing contract, asserting that the 2024 Freelance Model Waiver/Release/Indemnification Agreement grants it the right to broadly use Pujols' images "whether intact or in part, composite or distorted in character or form, cropped or altered, without restriction as to changes or transformations." The release, Rainbow claims, also permits use in composite works, waives the model's right to inspect finished advertising, and releases the company from liability for "blurring, distortion, alteration, optical illusion, or use in composite form." Rainbow does not frame the dispute as requiring a novel legal analysis, instead relying on decades of New York contract and right-of-publicity precedent to argue courts have long enforced model releases according to their plain language, and that the rights granted under the parties' agreement encompass the challenged uses. On that footing, it contends that Pujols' claims under New York Civil Rights Law sections 50-51, the Lanham Act, and related state-law theories should be dismissed. The court's July 16 order did not resolve that question. It only declined to freeze the images while the case moves forward.
Why it matters
For an independent designer, model, or small brand, this is the clause you have been signing without reading closely for years: broad grants of the right to 'alter,' 'transform,' 'composite,' or 'distort' your image or work. That language was written for retouching and cropping. Rainbow's position is that it also covers a wholly generated new scene the subject never appeared in. If a court agrees, the fight over AI likeness will not turn on whether AI is scary or new. It will turn on contract drafting from years before anyone was thinking about generative tools. New York tried to close part of this gap. Effective June 19, 2025, retailers must obtain clear written approval from a model before creating or using a model's digital replica, defined as a significant, computer-generated or AI-enhanced representation of a model's likeness that substantially replicates or replaces the model's appearance, excluding routine photographic edits. That consent has to be separate from the underlying release and must detail the scope, purpose, rate of pay, and length of time the replica will be used. But the Fashion Workers Act took effect after Pujols' original 2024 release was signed, and Rainbow is betting that pre-existing broad-alteration language survives regardless. That is the crux for anyone with an old release sitting in a drawer: does new consent law reach backward to cover an old signature, or does the retailer just point to what you already agreed to.
What to watch
Watch the motion to dismiss itself, not just the preliminary injunction denial, which only means the judge did not find the kind of immediate, irreparable harm that justifies an emergency order before discovery. A dismissal on the merits of the contract argument would be the real signal, and it would tell every brand using stock catalog images that decade-old boilerplate might double as an AI license. Pujols is not alone in raising this. Business Insider reported that Rainbow's studio manager told models in June 2025 that the company had started styling products and generating avatars with the assistance of AI, warning that fewer freelancers would be needed going forward. A second model, Elii Emeghebo, has separately accused a retailer of using AI to alter his features, including lightening his skin tone, a claim that raises discrimination questions layered on top of the licensing dispute. If you are negotiating any release this year, the lesson is not to fear AI. It is to strike or rewrite any clause granting unrestricted rights to 'alter, transform, or composite' your image, and to demand the separate, specific digital-replica consent New York law now requires. Silence in a contract is never neutral. Right now, in a Manhattan courtroom, it may be doing exactly what Rainbow says it always could.