The specific case (covered heavily - check
Techdirt for one) in question has actually brought in a much larger problem to light.
How should students treat code written as part of assignments or as part of their course-work in terms of licensing? Is there a precedent for licensing? Most
research activities conducted by universities have already adopted licensing framework. Here's an example. There has been debate whether such licensing should be free. Just check Medical Research and you can open Pandora's box. One more example is Singapore's
A-Star which is more of a group focused on preparing research for industry adoption including licensing and legal usage terms.
How about code released in books on Data Structures, Algorithms, Fundamental C programming? To my knowledge (do correct me if I am wrong), the code is usually licensed under the same copyright notice as the book itself. In some cases, the author changes this licensing and makes it available. One example is "Numerical Recipes in C" where the licensing terms of the code from the author(s) of the book is
explicit and can be found on a google search.
When it comes to university assignments, it is no news that the same template (if not the same course material itself) tends to get recirculated over a periodic basis. In some cases this period is annual and in others, the frequency is different. The debate raised is ages old. For most data structure or standard assignments of programming, you could find most of the code online. You could use this as a starting point or choose to write your own and learn your fundamentals. That's up to the student and the professor who is teaching and grading.
There is some truth in the statement (IMHO) that the Academia is shielded from the real commercial world. It works positive in some cases and is counterproductive in fields like Engineering (not Theoretical Computer Science.) In this specific case, if the University were to read all the fine print they have on students sharing course material (for which they pay for) and lecture notes and assignments, they would find the right solution. Bringing this (issue between a student and the professor) out to Open forums seems more of a publicity stunt that is going to get someone infamous for some and noticeable for a few others.
Focusing on the larger issue,
a Varsity must be clear on how course-work and assignments from the students will be licensed and treated. They already have set legal precedents for most research work (which in some cases is funded by commercial bodies.) Hopefully this issue raises a flag and lets varsities understand and embrace Open Source, encourage students to use it particularly in programming assignments. At the very least they should at least reserve procedures to let a student obtain due permission for displaying his/her works online under appropriate licensing. In the absence of a precedent and clear guidelines, such confusion and unnecessary nerve wracking experiences between a Professor and a Student are more likely to surface. I hope not.