Trying to punish piracy is like trying to order the tides around. New technology will be adopted, and people will use the most efficient and easy mechanisms to get the products they want. It is companies and governments that must adapt to this reality- organizations that can and will adapt to the new environment. America's intellectual property laws are simply too old and too random to make sense in the modern age.
As a result, they do little to profit artists and other forces behind creative works. Mostly, intellectual property gives profits to lawyers, and law firms. Organizations that exist only to enforce intellectual property, and thus wouldn't have to exist without intellectual property. As a deterrent, intellectual property has done almost nothing, but it still costs large sums of money and lowers the overall quality of the internet. As such, intellectual property laws should be immediately and completely eliminated.
As far as I can tell, there are two plausible results once piracy is legalized. The most likely result is that companies will find ways to still make as much in profits as they always have. Maybe just asking for donations will be enough. Maybe people will start having to pay for games before the games even start being produced (X amount of people would pledge to pay Y money and if enough money was pledged, everyone would be charged for the amount he pledged and the game would begin production.) It's difficult to tell how the free market would solve the issues without regulation, but every other technology in history that helped distribute art for cheaper to more people has led to a major expansion of artistic industry. The internet shouldn't be any different.
Alternatively, when intellectual property is eliminated, maybe major corporations won't be able to make enough money off of their art, and will be driven off the market. This isn't actually as disastrous as people make it out to be. People will still want high quality games, and lacking good artists people will turn to scientists who will supply higher quality computers at a faster rate given the improved demand for such machines. Free games made by individual hobbyists today are generally better than the biggest budget Atari games made in the past- this is because the technology behind them is so much better that a single programmer who is just trying to have fun, can surpass the efforts of large groups of programmers working a mere 30 years into the past. Such a result is a disaster for the companies currently operating today, but that is normal: change hurts those in power and opens up opportunities for those with the ability to take advantage of them. Profit motive is not actually necessary for the production of art.
With that said, my take on the prosecution of copyright offenders is twofold. From the point of view of enforcement, it's like hearing about the elections in Iraq- meaningless results from a meaningless war, that cannot possibly give humanity any form of actual benefit. An ongoing cost that we should stop paying whenever we're willing.
As for the person who ran afoul of piracy laws- basically, people have bad things happen to them all the time, so I'm not particularly more interested in victims of law enforcement compared to say, victims of drunk driving. However, some people seem to feel that either piracy victimizes companies or that simply breaking the law is pure evil in and of itself. Given that intellectual property laws have no actual reason to exist it's impossible for people to be victims of intellectual theft. If aliens in another dimension were interested in our art, I'm sure nobody would feel victimized to learn that they had been playing our games for years- IE, we accuse people not of an active crime, but of a passive act, or to be specific, intellectual theft accusation is a accusation of not doing something. It's reasonable applaud people who give their money to charities and game developers, and absurd to say either one is non-productive. However, not doing a good thing is VERY different from hurting someone else. In fact, most logic that demands that people must do the "right" thing is used by people who hate the game industry and feel that it's just a distraction from school, college and work, the "just" actions that people "should" be doing at all times.
As for the law being such a sacred object, most people routinely break the law, so the idea that a person is abnormally evil just because he breaks the law is absurd. A person cannot be in the bottom 50% of humanity by doing an act that more than 50% of humanity takes part in. That's not to say that most people break any particular law, but simply that once you take into account everyone who goes above the speed limit, everyone who doesn't perfectly follow safety regulations, everyone who litters, etc. you'll find that that covers most of America. Or, as Jesus put it so well "let the one who has never sinned throw the first stone!"
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