I've read a lot of this thread and I'm with Mirby; there is really too much grey area to call this a black and white issue. I agree that the composer saying he never heard the song before is BS - I thought the two tunes were overlaid, same as Palpable - but the idea of 'justice' comes down to making the injured party whole. if Powerman 5000 is choosing not to pursue legal action, is there any wrong to correct?
I think that this comes down to the philosophy of what copying is and making sure a published artist's original works are protected versus what the artist or publisher's intentions of that copyrighted material are. I mean, we all can come up with thousands of blatent or near-miss examples. Here's mine:
Once again, you can't tell me the composer hadn't heard this before submitting for publish, but even if he did know about this, Eric never pressed any charges. So, what harm is done, really? Does this set a bad precedent? I think ultimately enforcement is up to the copyright holder - if they don't care, why should we? Or, likewise, (as Mirby put already), if we follow the letter of the law, then how is any of the music posted on this website not guilty of the same?
I say let them go ahead - if someone takes issue, then they can pursue, but if not, I really don't see the harm. Also, a lot of the music industry is now about the exposure rather than the sales themselves; you can't sell to people who don't know you. If nothing else, I bet Powerman 5000 has had a nice boost in sales after this issue got so much attention.