This would be the case if copyright wasn't transferable. AFAIK, he wrote it while working for Google, thus the owner of his code was Google, which then transferred/donated the ownership to Sun. He testified that he copied the code which he didn't own anymore.
This is all pretty fucked up, but that's what the law is.
I don't think that's right - elsewhere in this thread is a quote from his testimony where he says it wasn't done for Google, so it wasn't a work for hire. Rules are different for works of corporate authorship and personal authorship. Most significantly, in the case of personal authorship, the author is allowed to take back their copyright if at least 35 years have elapsed since the grant of copyright to another party.
It also states that Josh Bloch is one of the authors. You maybe right that he may have done this as not a work for hire, or even that he may still own copyrights for this code (I don't know what the contributors agreement said at that time), but Google didn't even contest it in court.
