It's a fairly long and pretty sordid story that ended with a certain hacker's employer sitting down with us and saying "We're not admiting that he did it, but just hypothetically speaking, suppose he did. What do you want?"
And we said "we want him to stop his illegal activity". And he finally did and we dropped it, we're not on the lawyering business. We could have made a pretty big stink about it, it's not one of open source's finer moments, but all we wanted was a level playing field, we got that, we moved on.
I remember that, long ago; I don't think there's anything wrong with not wanting users of your product to leverage it to build a replacement nor disallowing it in the license.
I think where people (including myself) have a problem, is claiming that mercurial somehow has ripped off something from BK. From vague memory, BK laid claim to using a DAG for a DVCS? I assume you must also think that if someone is first to implement something that can be trivially found in an introductory computer science text, they have a patentable claim?
Ironic that "largefiles" is a user contributed extension, and that only mercurial seems to be guilty of "copying," but git must be so different that it's unworthy of being sued?
Huh? Are you claiming that Mercurial stole code from BitKeeper? Or does BitKeeper have patents on these fairly obvious concepts?
I mean, a large file store on a centralized server isn't exactly a novel concept. Other than that you don't provide any examples of "illegal copies".