Spamigation is mass litigation conducted with an aim to intimidate. in that way it's related to SLAPP suits, which companies aim at their critics, except they're aimed at stopping an economic activity, the copying of copyrighted material. And they're issued in bulk, hence the name.
The best examples are the RIAA suits against filesharing and DirecTv lawsuits against smart cards used to "steal" channels. (I happen to believe filesharing is fair use, but the smart cards are theft.)
No real investigation is done. You may be perfectly innocent. The suit is made out for an amount that is high enough to hurt ($3,500 hurts) but low enough so that it's not worth calling a lawyer.
The suits and threats go out in bulk. There is often nasty publicity when it turns out that some grandma is being sued for what her grandkids did, or bought. The numbers look large, but they are (as yet) not large enough to cause a political ripple. The press usually reports the stories in a way that makes grandma look like an innocent victim of her nefarious grandkids, who have now (supposedly) learned their lesson and will never do that again.
But what they are doing may arguably be legal. The aim of spamigation is to prevent that argument, creating a ton of case law that supports a questionable legal position.
So how do we fight it?
Politics is the way to fight this. The growing open source movement and Internet values offer a political philosophy that can be deployed to change laws and beat these guys. It's just that groups like EFF are so small, and open source politics is so new, that no one has yet connected the dots.
They should. Copyright and patent reform are going to become key issues as those who practice open source politics reach power. The abuses of our time need to be collected (they are being collected), documented (they are being documented), then used in the political battles to come.
But those battles will only begin after the current crisis is over. The good news is that the copyright industries are wedded almost entirely to the current political paradigm, to the Nixon Myth of Conflict. Don't let them weasel their way into the new coalition, and we'll have them. (And since the Democrats among them are Lieberman Democrats, they won't be able to.)