People are entitled to their personal definitions, and the fact that the legal definition is different is immaterial. When a reckless driver crashes their car into a kid, the kid's mum calls the driver a "murderer", and we don't consider them "wrong" (because the guy's crime is actually called "vehicular manslaughter".)

Now, it's fair to argue that using these defintions of "theft" is prejudicial, and that it's also fair to argue that people should refrain from that usage to minimise ambiguity, but it's not fair to argue that they should stop using a word because it doesn't agree with some "authoritative" definition (except in legal contexts, of course.)

I think you're looking at it backwards. The fact that this conversation occurs so often makes it clear that there is quite a lot of people who are aware "theft" is an incorrect term for it.

The way I see it happen usually is that these people point out that infringement, unlike theft, doesn't take away some physical property and isn't a simple zero-sum act (as in, if I steal 10 dollars from you, you have 10 dollars less). The next thing that usually happens is that the answer is something along the lines of "but it's still wrong" and/or "you're just splitting hairs".

That's why I brought JackC's explanation into play: he explains the real difference between theft and infringement, without sliding into legalese, and he also explains why it's so important.

People are entitled to their personal definitions, and the fact that the legal definition is different is immaterial. When a reckless driver crashes their car into a kid, the kid's mum calls the driver a "murderer", and we don't consider them "wrong" (because the guy's crime is actually called "vehicular manslaughter".)

I strongly disagree with this. The reason why people protest that infringement is not the same as theft is precisely because they feel that the legal definition matters.

The people who point out difference between theft and infringement don't do so because their argument is "Infringement is not theft, so it's okay." (Or at least I don't know anyone dumb enough to try that.) They do it because they know that infringement is at the very least legally wrong and they want to get the emotional coloring of the word "theft" out of the picture, so that people can finally settle down to discuss whether the laws governing infringement need to be changed or not.

Incidentally, I believe that a lot of people would consider "the kid's mum" from your example wrong, but that doesn't mean they claim that the reckless driver is not guilty or that he should be dealt with leniently.

Now, it's fair to argue that using these defintions of "theft" is prejudicial, and that it's also fair to argue that people should refrain from that usage to minimise ambiguity, but it's not fair to argue that they should stop using a word because it doesn't agree with some "authoritative" definition (except in legal contexts, of course.)

It's not about minimizing ambiguity. It's about stopping people from misrepresenting one thing as another, so that the correct thing can be discussed. What I think is not "fair" is telling those people "Well, my definition of 'theft' encompasses 'infringement' and I don't care, because I shouldn't be held to some 'authoritative' definition."