1) Copyright is only one of a suite a rights embedded in creative works, especially if that work happens to be a picture of a person. Creative Commons has no power over these other rights, and the licenses make it very clear that this is so. No matter what type of license is involved, Virgin violated the law by not recognizing these other legal constraints to using the images.

2) Any image with a CC license that is repurposed by someone else without attribution is violating the law. How can you prove that an image is yours? By posting it to a public forum like Flickr. The whole world then knows which one came first, and therefore who owns the copyright. If a magazine cover has your image on it later, it should be a simple matter to bring it to the attention of the magazine and get attribution. If they demur, take them to court. Obviously, if you use the NC term, then you have additional rights that are being violated in this case.

3) You are absolutely correct that the system works best when everyone understands that they should “play nice”. Compared to the cost of paying royalties on an all-rights-reserved image, the cost of contacting the photographer and getting an OK to use the image in the manner in which it was licensed is trivially small. If that seems like a hassle to the company, then they shouldn’t engage in the practice. It is incredible to me that their lawyers didn’t educate them properly about this common-sense practice.

I work for Creative Commons, so I am hardly impartial, but I really think that CC has the capacity to change the world for the better, and sharing is a big part of that equation. Given that this case has essentially nothing to do with the rights granted by CC per se, I certainly hope that people don’t respond by hoarding their creative works. What a shame that would be.

Since when has big business ever been “nice”, anyway? The difference is now that little people can publish online just as easily as big business, and they don’t have a team of legal advisers to tell them how best to protect their work.