How is it illegal if the Japanese copyright holder's don't have the material copyrighted in Germany? Is this a German law that protects copyrighted material regardless of where the copyright is held?
It certainly is illegal, regardless of location. Typically, though, Japanese companies don't want to get involved in such affairs, so they just turn a blind eye, and they are the only ones who can actually press charges, being the creators of the original material. That's the reason why we kinda brush off the whole legality issue. If they started pursuing action, BakaBT would probably start blacklisting a lot more than just Funimation stuff.
So no, it's not exactly a German law in particular. If anything, it'd be protected by Japanese copyright laws, because that is where the material originated from, or the international copyright agreement linked above.
Wouldn't it be more effective for them if they did it the other way around; often suing people (rightfully), but for smaller amounts? Wouldn't that lead to less people taking the risk?
...or is that what the three strikes rule in the US introduced already?
Of course it would. However, doing something like that is very expensive, so if they don't sue for obscene amounts (and win), it's hardly worth spending the time.
I think it's six strikes, but yeah, I think that it works kinda in that way. Not positive about that though.
