Thus, in order for this template to be permissible, the image itself must also be free under copyright law - whether because it's in the public domain (e.g. covered by a tag such as {{PD-old}}) or because it was freely licensed by the photographer or copyright holder; see Commons:Copyright_tags.

In a nutshell:

There are special provisions in copyright law to exempt utility articles to a wide degree from copyright protection.

See this derivative works exception. In brief, in the UK Supreme Court's decision in the Stormtrooper case, useful articles, guidelines as to the legal meaning of 'sculpture' were handed down by the High Court Judge in the first trial, which were endorsed by the Court of Appeal, and were therefore subjected to argument and judicial review by the UK Supreme Court: they were approved; and are summarised as follows:

• 'sculpture' can be things going beyond what one would normally expect to be art in the sense of the sort of things that one would expect to find in art galleries
• no judgment is to be made about artistic merit
• not every three-dimensional representation of a concept can be regarded as a sculpture
• the essence of a sculpture is that it should have, as part of its purpose, a visual appeal in the sense that it might be enjoyed for that purpose alone, whether or not it might have another purpose as well; the purpose is that of the creator, who may fail, but that does not matter (no judgments are to be made about artistic merit) because it is the underlying purpose that is important
• for example, a pile of bricks, temporarily on display at Tate Modern for two weeks, is plainly capable of being a sculpture; the identical pile of bricks dumped at the end of a driveway for two weeks preparatory to a building project is equally plainly not; one asks why there is that difference, and the answer lies in having regard to its intention – one is created by the hand of an artist, for artistic purposes, and the other is created by a builder, for building purposes.

Subject to disclaimers.