>Just curious if anyone else has had similar threats when implementing any type of software protection? Does anyone know of any cases where a developer was legally denied the right to protect their software?

I'm not crazy about putting dongles on computers either and think there's a better way to protect yourself. I have written apps for companies that requires periodic installation of a 'key.' That key is an encrypted number that matches with the system date. I'd say you might want to require something like this on your clients rather than the more intrusive dongle.