Duplicate content is a hot topic in the SEO industry. You'll find lot of talk and speculation about the consequences and penalties involved with it. If you think about it... there are sites that duplicate the content within their own Web site in a *natural* sense without making an effort. For instance, say you have an article both in HTML format and PDF. That's duplicate content. There are article banks that you can subscribe to that offer content for your Web site. If more than one person is using this service, you have duplicate content. Some people offer a print version of their Web pages - duplicate content. There's site scraping Web sites, multiple domains with the same site... What can you do?
If you offer two versions of an article on your site, you can use a robots.txt file to exclude one version. You can also use 301 permanent redirects so that only one version is indexed. The same practice applies with print versions of your Web pages. This will insure that Google won't be left to decide what content/page they want to index.
Those are some simple scenarios. What about the people that are outright stealing your content, could your site be penalized? Probably not. The bots/SE's are pretty smart and realize who's content was first. Duplicated content isn't penalized however, it's just not given any ranking consideration. Keep in mind that Google's goal is always to return the "best" version of a page.
Like with all things search engine related - be smart and you'll be fine. If you have someone copying your site, you're more than likely going to be ok. Depending on how you feel about your content being stolen, you might want to consult an attorney or at least send a letter to the party in question.
Related Links and Resources
Deftly dealing with duplicate content - from Official Google Webmaster Central Blog
Duplicate Content Issues
Duplicate Content Issues and Search Engines
How to Remedy Duplicate Content and Magical % Thinking
The Most Common Reason for Dropped Rankings: Duplication
The Illustrated Guide to Duplicate Content in the Search Engines
Unique Content VS. Plagiarism In The Eyes Of An Algorithm
Which Came First: the Content or the Plagiarism?