You are dramatically characterizing the case. The Feds are the plaintiffs in this case, not Microsoft. The man isn't going to prison for just distributing disks, he's going to jail for fraudulently claiming that his disks were authentic and going so far as to get the original disk design printed on his fake disks. The government originally claimed that the copyright violations on these disks were valued at several hundred dollars per disk, but Microsoft had that value reduced to about $25 per disk, so Microsoft actually helped to reduce his punishment.