Terms of service does not mean the forfeiting of user's copyright. There is an argument to what extent snippets of code is fair use versus when it becomes excessive and violates the copyright.

You are right though, battling Microsoft in court will be no easy fight, and it will probably be a long one. However, I think the sharks are in the water and smell blood (money), as many lawyers see weaknesses in Microsoft's arguments and justifications (excuses).