Laura Gilbert has the story in The Art Newspaper:
"Last year a US District Court judge rejected Prince’s motion to dismiss Graham’s case. ... This time around, in summary judgment motions filed on 5 and 9 October, Prince argues that he had to use as much of the photograph as appeared in the Instagram post to accomplish his purpose. In a 15-page statement calling his iPhone a paintbrush, Prince explains that he wanted 'to reimagine traditional portraiture and bring to a canvas and art gallery a physical representation of the virtual world of social media'. Had he altered the photographs, he says, that intent would go unseen."
Law360's Bill Donahue points to "this paragraph [from the motion papers] -- which makes tons of sense in the specific context of a fair use argument but is also, like, brutal shade":
"Not only does Prince’s work have a transformative message, meaning and purpose, but it also has in no way usurped Graham’s market – to the contrary, Graham sold his Photograph for the greatest amount after Prince’s use. This is not a case of forgery, piracy, counterfeit or plagiarism; nor is it copyright infringement. Indeed, the purchaser of the Prince painting knew the included image was not taken by Prince and has unequivocally stated that he would never have purchased the Photograph; rather, he wanted the content, context, commentary, and technique of the Prince work. Indeed, it would make no sense for someone to pay for a Richard Prince if they wanted the Graham Photograph, which they could easily purchase for a fraction of the price of a New Portrait."