The cake baking story I actually agree with Disney. There was a shop making custom cakes and they took requests from people and made the cakes to order and sold them. People often used to ask for cakes with Disney characters on them so they made them with their characters on the cakes and sold them. Basically they sold Disney IP even tho it was a mom and pop shop. But rules should apply both large and small. I don't think that there was any case for a fair use when your selling stuff like that. There is a case to say tho that copyright should not have been extended just to allow Disney to keep the very old B&W Mickey Mouse vids still in copyright when their term should have expired.

The other one was a kid who was dancing in a you tube vid with Prince track in the background and prince is very defensive about his works and employs lots of lawyers to sift the net for his songs. Now in that case there was a fair use since the song was somewhat incidental to the vid clip and it was non commercial. Prince got a lot of stick for that.

You say we should stick within the rules but thats not possible. With a $150,000 fine per work uploaded and this site, or more precisely Arcana, being the stop buck and with no requirement for anyone to be informed about the upload, its possible for an IP rights holder to get an anonymous upload of his work and then turn around and sue this site. This is exactly what has been happening since with the data dump of IP addresses from the Megaupload case, it was noted that many of them were from the MPAA and related cronies. As one person said this week, patent litigation and copyright infringement are now just costs of doing business instead of fines. You cant avoid them any more. This is all being done to brush aside free or low cost software, art and IP so as to push out the small vendors out and leave the field free for the big guns to monopolize it.