All residents who sign up for the Second Life agree to abide by the rules in the Terms of Service (ToS) (the contract that you have not read but ACCEPT when you created your account). It is very common for people not to know the rules. Unfortunately ignorance is not a defense
Terms of Service – ToS: URL: http://www.lindenlab.com/tos
Many creators use their imagination to make original content in Second Life, however, there are many questions about what constitutes intellectual property. For example when you create things inspired by real-world objects it’s important to make sure that you are not misusing others intellectual property, i.e. characters or material from a movie, book or other work protected by copyright. This includes images of celebrities or names (protected as a "right of publicity").
The copyright protected content, trademark, or celebrity media cannot be used in Second Life, except by the owner himself. If you wish to use others intellectual property it’s necessary to have the permission of the owner (in writing.)
When we agree with the Terms of Service, we grant Linden Lab certain licenses to use our content. However, we retain any and all intellectual property rights to the content that we send, publish, and submit through the servers, sites and other areas of service. When we agree with the Terms of Service we also affirm and ensure that we have all necessary intellectual property rights, licenses, consents and permissions to use and authorize Linden Lab and Second Life users to use any content that shows off the manner contemplated by service and Terms of service.
As a matter of course we should all know the use of Second Life is subject to copyright, trademark and the laws of advertising law. These are complicated laws and it’s difficult to understand the Terms of LL services and U.S. Policy Digital Millennium Copyright Act ( "DMCA"), which is the American law on copyright.
I’d like to emphasis that it’s important to know that real world laws apply to intellectual property infringement, and nothing about your use of Second Life will protect you if you are infringing o the intellectual property rights of another person. The legitimate owner of the intellectual property may bring a direct action in real world courts against those who are violating the law.
One of the biggest "pests" of Second Life is malicious the use of CopyBot or similar tools to copy the intellectual property of other creators in violation of applicable law, and which also violates the Second Life Terms of Service.
The original function of CopyBot was to benefit content creators, not hurt them. This tool has the ability to export information from objects outside SL, creating "backups" of items; or to speed up the creation process. It’s a very useful tool for managing object creation.
However, these "backups" can be imported back into the SL. Anyone can export the information for any object and import it back into Second Life, regardless of authorization from the owner (creator) of the object. Thereby giving the object permissions that it did not have before. Therefore the information pertinent to your product can be exported by someone using CopyBot, causing the object to become "full perm" with all copy permissions, modification and transfer.
If copyright infringement as set out in the Terms of Service is uncovered, Linden lab will take drastic action against the users of these tools.
When we accept the terms of service, we agree to use Second Life as provided, without unauthorized or other means of access or unlawful use of the software. We should not and cannot enter in to unauthorized work or conduct unauthorized distribution of the Linden Software. Making illegal copies violates the Terms of Service and may result in suspension or prohibition of Second Life accounts.
If you believe that another resident used CopyBot (or a similar application) to make illegal copies of your content, you should send LL an abuse report and provide as much information as possible to support your claim. While technology cannot prevent the copying of data drawn on the screen, residents who try to profit illicitly using CopyBot will not be tolerated.
It’s important to remember that many residents are allowed to have or sell copy devices because there are legitimate uses of these copying mechanisms. It is the offense of copying others work that is not allowed or tolerated.
Images taken from the official Linden Lab websites