The most common reason for finding someone sat in your seat is simply they misread the row. When it is pointed out they normally move. If they don't the cabin crew ought to be able to resolve the problem without too much fuss. It can occur that the same seat has been alocated to two people in error, and when that happens obviously one will need to be re-seated.
The fact that this may happen does not "entitle" the subject to an upgrade although that may on occaisions be the response. It most certainly doesn't allow the passenger to award themselves an upgrade any more than they could award themselves a bottle of champagne from the bar ! Your ticket is a contract for a particular product ( class of travel), it does not contract a particular seat and the airline is entitled to allocate any seat in that specific class. If the airline wishes to materially improve the contract by upgrading a passenger that would be deemed as acceptable. If an airline downgrades a passenger that would amount to a breach of contract and be subject to reimbursing or otherwise compensating the passenger for their loss. Even then the contract is likely to stipulate the maximum loss in such circumstances. Purchasing the ticket and /or travelling on it makes the passenger a party to the contract. Almost all contracts are written to protect the seller of a product and this is no exception.