Keep in mind that I'm not a copyright lawyer - I'm a writer and knitter who keeps up on my legal rights and responsibilities. And I'm writing for an international audience, and laws vary. So I'll keep this general. But ultimately, copyright in a legal sense is not what most people believe it to be, and a lot of the rules we knitters adhere to are not, legally speaking, copyright law, but professional courtesy and industry standard. (That's why I often get VERY annoyed when people on knitting message boards shriek about copyright, but that's a rant for another day.)
Copyright was originally developed/invented to keep other people from making money off your ideas. As I recall, it was originally applied to industry - inventions of the indsutrial era, like reducing cylinders and spark plugs. Physical STUFF you could put your hands on and determine easily if there was copying going on. The idea of copyright and/or plagarism in writing didn't come along until the idea of royalties; until then, you were paid a flat fee to produce a work, be it novel, broad side, or even play; you had your pay check, and it didn't matter if people copied it. I suspect no one cared much about copied work or intellectual property (as we call it now) until the 1600s when all of a sudden, amature 'natural scientists' were doing experiments and getting into quite ugly arguments over whose idea was whose. Scientific journals began to be published, to put it all in writing, and the idea of an idea belonging to a single person kind of washed over to writing and music.
That's what the current laws were put in place to deal with; that's ALL they deal with in a planned, coherent sense. At the moment, we are trying to hammer out exactly how we're going to deal with the new crop of problems created by the internet; here in the US this has spawned the DMCA, a well-meaning but ignorant attempt to halt all sharing of copyrighted material and intellectual property across all of the internet. (Yeah. That'll work. Short blurb here.)
What does all this mean for us? Well, the only part of knitting that is currently copyrightable, meaning that it can clearly be labeled your proerpty, and you can prosecute in court over it and if you prove it IS your original work the court will find in your favor, is THE WRITTEN PATTERN. Not the pattern itself, in the sense that any of twenty versions of directions will prodcue the same sweater. No. The actual words and phrasing used to describe the process of knitting that specific sweater that specific way. In that sense, it is the same as writing an article about knitting that contains no pattern at all; it is the person's work, and to copy it is plagarism. That means, legally speaking, I could re-write the pattern for, say, the Baby Surprise Jacket, and it would be my original work. This is a gray area of copyright law, that will eventually result in a lawsuit when a fed up knitter scrapes together the dough for a lawsuit and forces through a precedent that copyrights original knitwear. But so far that hasn't been done.
In the mean time, it's kind of an industry standard to frown upon that kind of thing; people HAVE rewritten the directions to famous sweaters, and have been told politely by the original author to cease and desist or get sued. So far the person committing the fraud has always backed down. But in the case of famous knitters, the industry looks the other way: Brandon Mably swiped Teva Durham's famous fair-isle short rows, made them into stripes instead, and played dumb when people complained about his theft of her idea. I've seen several versions of directions for mobius scarves that don't even mention Cat Bordhi's name. And because the WRITTEN DIRECTIONS are original, even if the technique is not, it's legal. It's bullshit, but it's legal. At least until someone sues over it and makes a new law. (That's how it works in the US, anyway.)
And so we come to copying, which all of us do, consciously or unconsciously, with everything we do. Knitting is grid-based, and has been going on for about a thousand years; it stands to reason that a great many patterns, especially small, repetitive, geometric patterns, have been reinvented, over and over, dozens of times, by people all over the world. Generally, when I come up with something 'new' (like the twisted-stitch pattern I used for the Husbeast Gansey last year), I assume someone else has already done it, because odds are they have. Inspiration also isn't copying; the Gustav Klimt painting that Kaffe Fassett then knitted, isn't a copy. A copy would require paint and canvas. Though I think for many reasons idea sources should be listed, among them good manners and the education of the person reading, it's not legally required.
Then, of course, there are the outright copies. We'd like to think that honest-to-gosh copyright infringement is prosecuted to the full letter of the law, and the person doing the copying has their career end, but rarely is that the case. Just ask Nora Roberts; Janet Dailey, another novelist, ripped off her work and even after Nora prosecuted, Dailey is still publishing with her same publishing house (comments by Nora, here). It's even worse, and harder to prove in knitting. Recently someone was found, selling Knitty patterns (among other free patterns from Berroco and other yarn sites) on e-Bay. The best that the authors could do to rescue their own work was report the seller to e-Bay and demand he quit selling. He did, but I bet he's back, somewhere else, selling someone else's free patterns.
There are ways to trace these things, at least on the internet (the easiest way is to find a unique phrase in your pattern or article, and plug it into Google and see what Google coughs back at you). Whenever I do it, I wind up annoyed, because you land back in that copyright gray area that needs big bucks and lawyers to solve: My history of knitting article is quoted on Wikipedia. They put my name on it and give me credit, so it's not a copyright violation, but I dislike having my work used on Wikipedia. You know what? As the law stands, I'm shit out of luck.
Copyright doesn't give you full rights to your original work forever and ever, so you can control it. Even ideally, all it does is keep other people from profiting by it. That's all.
EDITED TO ADD: A far better example of what copyright will not do, than me and Wikipedia: Paul Simon (the musician) has said openly that he does not like punk music. This led to at least half a dozen remakes of his music by punk bands wanting to shoot him the finger (including the Lemonheads' version of Mrs. Robinson, in my opinion better than Simon's original). As long as the punk bands give credit to Simon as the writer of the music, and pay him a cut of the royalties, there is not a single thing Simon can do to stop them. They are not depriving him of income; they are contributing to it. Too bad, Paul. Welcome to the fucked up world of copyright law.
Plus, for a knitter's view on copyright, head on over to Girl from Auntie. She blogs about knitting industry copyright and ongoing lawsuits. She knows how to knit, too; she's the designer of Rogue.