Sir Savant wrote:Isn't there some legal spiel that says that if you don't make a reasonable effort to protect your IP, you lose control over it? I remember reading about it and Xerox once, but don't remember the exact outcome. Would that not apply here as well?
No.
For copyright (which would apply to things like ripped sprites, music, libraries of code, operating systems, software, or almost anything that's an expression of an idea), all work is automatically protected. That protection can not be lost unless it is waived by the original author (in which case, it becomes public domain). This would specifically apply to copied artwork (sprites, tile data), derived works (such as level designs based on original ones), and to the code of the Windows CE libraries. Remember also that copyright only covers distribution (in other words, the right to copy).
For patents (which don't apply here), there is no requirement to enforce them. You could even, for example, force Microsoft to purchase a license for a patent, but let everyone else use it for free (see the Eolas patent case against Microsoft over Internet Explorer's use of plugins).
For trademarks, which may apply if you're making a game based around, for example, Sonic, it is possible to lose protection by allowing others to infringe upon the trademark. However, this really only applies to commercial trademark infringement. There's no requirement to police the entire planet, and threaten everyone who uses your trademark in any way with legal action. Even then, you don't automatically lose protection. It just makes it much harder to prosecute someone later, because they can cite instances where you allowed it as precedent.