We are a common law nation, ruled by a sovereign populace which decides for itself -- by millions of private actions and interactions -- where and how its liberty should be limited. Such common law is not, and cannot be, written down in full; rather, our legislators and judges seek to codify the commonly accepted principles of "just" and "unjust" that emerge spontaneously from our society.
No person or group sat down one day and decided that the best way to determine the facts when a person is accused of wrongdoing is to have the accused stand before a jury of their peers; instead, the concept of trial-by-jury came about over the course of hundreds of years, mutating, morphing, adjusting, until it was widely recognized as the fairest and most effective method for enforcing justice. Likewise with many of our society's critical building blocks: democratic elections; seperation of powers; judicial enforcement of contracts; judicial review of laws; private property rights; freedom of speech, religion, and assembly; freedom to keep and carry weapons; freedom of parents to raise their children without government interference. Many of these principles we take entirely for granted, but they are by no means universal. As Americans, the right for an individual to keep property and to have exclusive authority over its use is natural and ingrained, but where did the concept come from? Common law.
Our legislatures and courts are supposed to craft our laws with deference to the common law principles that are embodied first in our Constitution, and secondarily in the shifting opinions and actions of the population as a whole. That's why I believe many traffic regulations are unjust: if they are broken routinely by a majority of drivers, then that itself is an indication that the regulations are not in line with the will of the people. Laws that are held in contempt by the people are, under common law, unjust.
Sometimes the last two principles I mentioned are in conflict. Consider the difficulties facing the RIAA as it tries (ineffectually) to stem the tide of music sharing. They argue that when people trade music over the internet it costs them CD sales; on the other hand, music traders claim that they buy more music than they had previously, and that sharing on the net actually increases public awareness of many bands who would otherwise not be noticed. Either or both of these may be true, but neither touches on the crux of the matter. The music industry owns the copyrights of the music being traded, and as such they have sole authority to determine how that music is used and distributed. The public as a whole doesn't want to honor those copyrights, and the RIAA believes that these millions of people are criminals. Under current definitions, they are, but these millions of people form the foundation for the common law that governs our society.
Eventually, one side will lose. Society cannot tolerate the stress of such mass criminalization, especially if the RIAA begins enforcing its property rights through the judicial system. While the music industry is in the right as a matter of written law, society itself is the ultimate arbiter of how that law is written. Copyrights were instituted as a bargain between creators and society: society will enforce your exclusive rights to your intellectual property for a limited amount of time, and in return that property will enter the public domain after the copyright expires.
The system has served us well for quite a while, but technological changes may have generated such a shift that society no longer feels the bargain is fair and equitable. Copyright terms have been extended many times, and with the passage of the Sonny Bono Copyright Term Extension Act of 1998 works are protected for the life of the author plus 75 years, or plus 95 years if the work was created for a corporation. (Since the law was created shortly before Mickey Mouse was destined to enter the public domain, it's often called "The Mickey Mouse Protection Act".) That's an incredibly long time, and it's hard to argue that such a long period is necessary to encourage creators to invest the time, money, and energy to required to develop new and innovative ideas. Would artists suddenly stop creating if their works were only protected for, say, 20 years? I doubt it.
Likewise, the internet has made it easier than ever to distribute intellectual property. Society reasons that if copying a TV show onto a video cassette is acceptable, why should copying a song onto a hard drive be any different? It's a rhetorical question, and the massive use of online file-sharing services demonstrates that a great number of people have reached the same conclusion.
This conflict has been brewing for several years, and may finally be coming to a head. Its final resolution won't come from a judge or legislature, even though the opening acts may well be played out in a courtroom or capitol building. Society as a whole will decide that copyright in its present state is valuable and equitable enough to keep around -- and will reflect that in its actions -- or copyright as we know it is doomed.
Personally, I suspect that the our current concept of intellectual property will be torn down and rebuilt anew. The form of that future bargain between artists and society will be determined over time.
Mark Aveyard points out that file sharing systems are already adapting to the lawsuits.