Code Stolen With a Threat of Public Release

A couple days ago, someone hacked into one of my developer's accounts where he was able to steal the source code for a game myself and about 8 others have been working on. He has been threatening to release it if I don't send him money.

Questions:

1. Is source code automatically copyrighted by me?
2. What can happen to the hacker, in the law, if he releases the source code?
3. What are the consequences of releasing our source code?
4. What should I do?

Thank you,
Feriscool.

You're in what state?

If somebody hacked your computer and stole data, even before they contacted you to extort money, you would want to make a police report.

Quote:

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Quoting aaron

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You're in what state?

If somebody hacked your computer and stole data, even before they contacted you to extort money, you would want to make a police report.

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I live in the Canada, but the hacker lives in the USA.