Pandora's box has already been opened and there is no going back. I doubt OpenAI, et al will get anything but a slap on the wrist in court because punishing AI companies would have a negative effect on the US economy.
>Can the same be said about DeepSeek or any other open-source model provider performing distillation?
Open source models that distill from SoTA reminds me of the story of Robin Hood -- robbing the rich and giving it to the poor. So to answer your question: yes, but it's better than the alternative where only a select few companies have SoTA models.