Are you kidding? If I hire a contractor to do work, and that work is done (meaning I can look at and interact with the product) then I'm not going to waste valuable time "verifying" that product against every other product on the market. Especially against other "beta" products that only a niche few (relatively speaking) have heard about. That would be a dumb use of time. Why? Because even if the contractor did rip off the code, (which should be so unthinkable as to not even be an issue,) all I have to do is say "hey, the contractor did this, not me -- I've pulled the plug and fired the contractor." End of discussion. That's exactly what Microsoft did, and now Plurk is pushing the issue too far.
Plurk did get a ton of free PR from this. For thousands or tens of thousands of people, this will be the first time they've heard of Plurk. To claim that Plurk was somehow "damaged" amidst all of this is just stupid. Yeah, they were ripped off. But nobody got rich off of it. There is no money to chase down. Plurk could net themselves way more money (or rather, any money at all) by trying to generate new profits by taking advantage of all the free PR they got. But they're throwing a hissy fit after Microsoft has done their part in fixing the issue (pulling the plug on a product that wasn't even released yet anyway). As others here have said: what a waste.
This is the risk you take with using contractors. When you hire someone to do the work, you are the legal owner. This includes the good and the bad. The good being you can make money from it. The bad being that you now have a potential legal liability. When something is done work-for-hire, it is legally just like you produced the work in-house. So from the outside world, Microsoft is the entity that is legally responsible. The contractor is responsible to only Microsoft (and I'm sure their contract includes a provision to deal with this).
What you're describing is a legal nightmare. In this case, imagine that Microsoft didn't pull the plug. What would happen then? Would Microsoft say "Oops, sorry, it was the contractor's fault. But we paid him, and got our code, so we're going to keep using it." They didn't pull the plug out of the goodness of their hearts. They did it because they are legally liable for it, and the longer it was in the wild, the worse their liability.
The rest of this is PR. Plurk maybe pushing this a bit far, but that is a PR decision, not a legal one. From a legal perspective, they might have been injured enough for a lawsuit.
Plurk did get a ton of free PR from this. For thousands or tens of thousands of people, this will be the first time they've heard of Plurk. To claim that Plurk was somehow "damaged" amidst all of this is just stupid. Yeah, they were ripped off. But nobody got rich off of it. There is no money to chase down. Plurk could net themselves way more money (or rather, any money at all) by trying to generate new profits by taking advantage of all the free PR they got. But they're throwing a hissy fit after Microsoft has done their part in fixing the issue (pulling the plug on a product that wasn't even released yet anyway). As others here have said: what a waste.