The term "Duplicate Content Penalty" is an inappropriate name because penalties in Search Engine Rankings are actually points which are deducted from a page.
Duplicate Content is not penalised, it is simply filtered out.

There are Four Types of Duplicate Content.

1. Websites with Identical Pages : These pages will be considered as duplicates and will be treated as spam and will be filtered out.
Affiliates which use Landing Pages are extremely vulnerable to being treated as spam and will be filtered out if the content is duplicate.

2. Scraped Content : Is taking content from a website and making it look different and then using it on blogs, again this is treated as duplicate content.

3. E-Commerce Product Descriptions : Manufacturers use descriptions to describe their products but other re-sellers of the same product will use the same manufacturers descriptions and again this will be classed as spam.

4. Distribution of Articles : This affects all of us here at Wealthy Affiliate.
Now if you publish an article which in turn gets copied and put out all over the internet.
You would think this was a good thing, but not necessarily for all the sites that feature the same article.
Although this type of duplicate content can be difficult because both Yahoo and MSN will determine the source of the original article, but will allow the content to be relevant in search results, Google on the other hand may not.