The celebrated American artist Richard Prince has been ordered to destroy works worth tens of millions of dollars after a court ruled that the paintings, which reworked a series of photographs by the French photographer Patrick Cariou, had breached copyright.

A New York federal court has ruled that Prince and his gallery infringed Cariou's copyright when he produced a series of works in a 2008 show using 35 pictures from the book Yes, Rasta, published by Cariou in 2000, "in their entirety, or nearly so".

Prince adapted the Cariou works by adding, in one instance, an electric guitar and some splodges for eyes.

The ruling, which may lead to an appeal, stands to cost Prince and the Gagosian, one of the world's leading contemporary galleries, with outlets in London and New York, potentially huge sums. Eight of the works from the exhibition, which was entitled Canal Zone, have together sold for more than $10m (£6m). Seven others have been exchanged for other works of art for between $6m and $8m.

Prince has often made a virtue of his appropriation art. His images are sometimes taken from old advertisements in magazines. He told Art Forum magazine in 2003: "I had limited technical skills regarding the camera. Actually, I had no skills … I used a cheap commercial laboratory to blow up the pictures … I never went in a darkroom."

Prince's lawyers had told Deborah Batts, a federal judge sitting in Manhattan, that Cariou's photographs of Rastafarians, taken over six years, were "mere compilations of facts … arranged with minimum creativity … [and were] therefore not protectable" by copyright law. Of the electric guitar he added to one of the photographs, Prince testified: "He plays the guitar now. It looks like he's always played the guitar, that's what my message was." The lawyers claimed "fair use" of the images.

But the artist admitted that he used the photographs as raw materials and intended to sell the images. He and the gallery were found to have acted in bad faith by not asking permission to use Cariou's photographs or withdrawing them from sale when the photographer sent them notice.

The judge ruled that rather than simply adding elements to an original work, a new piece should create something "plainly different from the original purposes for which it was created". He cited a landmark case in which the American artist Jeff Koons created an exaggerated sculpture based on a postcard of a couple with their arms full of puppies. Koons lost that case.

The judgment stated: "In a number of his paintings, Prince appropriated entire photos, and in the majority of his paintings Prince appropriated the central figures depicted in portraits taken by Cariou."

Another New York gallery owner, Christiane Celle, cancelled a Cariou show, saying she did not want to exhibit work already shown at another gallery.

Ahead of a ruling on damages on 6 May, Prince and the Gagosian have been ordered to destroy all the paintings and exhibition catalogues that they hold and to tell buyers that the paintings were not lawfully made and cannot lawfully be displayed.

The ruling stated: "It is clear that the market for Cariou's photos was usurped by [Prince and Gagosian] … the court finds that Prince has unfairly damaged both the actual and potential markets for Cariou's original work and the potential market for derivative-use licences for Cariou's original work."