Quick primer for those new to the topic:
copyright: "the legal right to be the only one to reproduce, publish, and sell a book, musical recording, etc., for a certain period of time" This is a legal concept, and when you "infringe copyright" you are breaking a written contract that affords one person (or select people) the right to reproduce and publish.
plagiarism: "Plagiarism is theft of another person's writings or ideas. Generally, it occurs when someone steals expressions from another author's composition and makes them appear to be his own work." It's not a legal term, and isn't, in itself, illegal. However, plagiarism does contribute to the argument of copyright cases.
If the mural in question was unauthorized (by the owner of the building), then it's highly unlikely that there's any true copyright attached to it (they're claiming they have the same protection all artists have - it hasn't gone that way in the past). However, this use - with the included direct misrepresentation - may result in a win for the artists. Blatant plagiarism can alter the outcome of a copyright case. It really just depends on how strong their argument is. See this article for more info.