Had a chance to read the Cariou appellate brief. They smartly keep the argument as narrow as possible: they don't say all appropriation is infringement, just that this particular example -- where "a transformative purpose is negated by the sworn testimony" of the artist (p. 5) -- is. They say Prince "admi[tted] that he had no message he wanted to convey about Cariou's photographs and only appropriated them because he liked them" (pp. 1-2).
Relatedly, Cat Weaver says "the dueling Cariou v Prince briefs have added new certainty to my theory that transformative use is a singularly unhelpful notion."
And Joy Garnett has organized a panel, "The Case For Appropriation," Feb. 16 at SVA.