Those guys gave up because they didn't have to resources to defend themselves, but had they, they would have won.
That's irrelevant. The point is, copyright laws have a chilling effect on the creation of derivative works. That's a loss for society any way you care to slice it. The only question that remains, which outweighs which, the losses or gains?
Sure it is. Had this guy known his rights, he would have kept on going with his project, and nothing legal Square could have thrown at him could have stopped him. Hell, he would have even gotten money out of them.
And anyways, who cares about society? You are so prone to look down upon laws yet your referential is the very frame for laws.