Andrew, the fact that you spent well over an hour just talking with the author highlights the need to streamline the process of resolution (as in my comments to your blog on the topic). The more unequivocal the terms and your internal due process are, the less time you have to spend beating around the bush and wasting your time in improvised conflict resolution (and good luck with that) while you could be coding that code.

For starters, you could establish some ground rules for a base level of see more "borrowing code". Then, if the mod authors themselves offer an additional license on how their code can be reused (and you should encourage them to license their work clearly, perhaps offer sample licenses to use at the time of upload), and then if you see that code reused beyond the limits of the original author, it's crystal clear that there is a case of illegitimate reuse (whether illegal or not), and the copycat needs to go down. The person filing the complaint should of course be responsible for filling up that standard form where plagiarism is demonstrated.

I don't think any of the above would be too hard to do. It's just a question of whether you are willing to step into those shoes or not. If not, and as long as the transactions happen on your premises, there's bound to be unnecessary confusion and discontent that will alienate some of the independent developers you value, and who contribute to your software in many ways.
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