When we contract a new client, they must sign off on a section involving copyright laws and acknowledges their responsibility for all material that they submit to us for use in their web site. If they want to illegally include copyrighted material they are made of the situation well before their site goes on line.
I run my site and the sites of my clients through Copyscape every month. Recently I found someone - who posts on this forum no less - that copied works from my own site.
After I sent an email to them they re-worded the ad copy. Unfortunately, that's not good enogh. Derivative works are also a violation of copyright law.
You can read more about copyright law and the internet at this site:
http://www.keytlaw.com/Copyrights/copyrightlaw.htm