See the current issue - July 2004, page 44, "If It's Broke, Fix It," by Gary Stix -of Scientific American for another brief review of this problem in the form of a books review of "Innovation and Discontents:...". There are several books coming out right now that take different looks at the problem, but I haven't heard any real solutions yet - just more attempts to make a broken system work.
A real solution, I believe, will require something along the lines of an explicit, real "social contract." The legal system is simply too unwieldy, slow and expensive, and it gives huge advantages to big players, and all these problems are multiplied accross borders. But suppose we had an extra-state - that is, independent of any nation-state - social contract that specified methods of dispute resolution, such as by binding arbitration, backed up with bonding, outlawry - as a last resort, etc. Then, it might be possible to sign enough people onto subsidiary agreements re intellectual property that the problem would be minimized.