The Purpose of Copyright
This short animated video by the Copyright Clearance Center explains the basics of copyright.
Copyright protection is automatic as long as the item meets two critera:
It is an original work
It is in a tangible form -- paper, sculpture, etc.
Copyright on an item lasts the lifetime of the author plus 70 years after their death.
For more specific information see Copyright Term and the Public Domain in the United States by Cornell University
Penalties for Copyright Violation
Infringement of Copyright is:
"Anyone who violates any of the exclusive rights of the copyright owner as provided by sections 106 through 122 or of the author as provided in section 106A(a)." These violations include reproducing or distributing the copyrighted work, or downloading/uploading a substantial part of the work.
Using a copyrighted work without permission is an infringement of the copyright law and the copyright holder could file a lawsuit. The law provides for the copyright holder to be compensated substantially for damages and the legal costs. . If the lawsuit is successful the penalties could range from a fine of $200 - $150,000, plus court costs and attorney's fees.
For more information on Copyright Infringements and Remedies see Chapter 5 of Title 17.