"Flying under the radar hoping we don't get caught and sued for something we know is wrong" should not be a part of any reasonable business plan.
Name one startup that began knowing they were going to be sued and went on to a successful exit.
Parenthetically, the original Napster, the one that began knowing it would be sued, was sold about 3 years after its founding for less than $2.5 million as part of bankruptcy proceedings -- and I doubt that the owners took any significant dividends out of its before its sale: http://en.wikipedia.org/wiki/Napster#Current_status
Some do it to prove a point, some do it to prove that the market exists.