Earlier this year I was flying FRA-SFO in upgraded C onboard a 777. I had an aisle seat in the middle section, and the other aisle seat was occupied by a gentleman; the middle seat was empty. Shortly after take-off he pulled out his 1K card and waved over a FA and discussed something with her (I didn't pay attention). Shortly afterwards the same story again, this time with the purser. She spoke loud enough that I could figure out that this gentleman was trying to get his wife/girl friend/travel companion moved from economy into the empty middle seat. The purser firmly and politely declined (despite the 1K card waving and some arguing).

I always pay for my wife's upgrades, either with miles or SWUs/e500s/CR1s. I assume this gentleman could have done the same thing, and for some reason chose not to.

You're talking about good-will. If the purser had agreed to the free inflight upgrade, UA would have risked losing the good-will of all the other passengers in C who in one form or another paid for their seats in that cabin.