google and duplicate content

I've often wondered how Google manages to watch for duplicate content when content is being produced so quickly on the web. It's common knowledge that Google penalizes sites for using duplicate content, but I am curious how they determine just who is copying who. Is it simply based on which site was indexed first? In other words, if I wrote a 100 page website chock full of information and hadn't been indexed yet and someone else copied the entire thing to their website and they get indexed first, who does Google penalize? Would they penalize my site if it was indexed later because it assumes that I am copying content from the other site? Or do they have some way of determining that the content in question is in fact my own and that they can then go back and penalize the site that copied it from me?

I also wonder how they determine ranking for sites that utilize canned copy from affiliate catalogs in their site? How they they determine who had the affiliate copy text on their site first? In fact, let's throw the affiliate basis of the argument out of the window. Let's say we are talking about two big online stores...let's say Target.com and WalMart.com, who are carrying the same item for sale - a widget. As far as I know, neither of these companies write their own item copy for their online catalogs (but I could be wrong). So let's say that they took the actual manufacturer's description of the product and copied it word-for-word into their online catalog, which is probably what the manufacturer intended. So, you end up with two stores selling identical products with a description that is identical. As a consumer searching for that product, which site comes up first in the results?

Does one of these large online retailers get penalized for having the same copy as the other? And if so, how do they determine which one gets penalized for "copying" the description and which one is awarded as the original "author" or publisher of the description on the internet? It's all very confusing and Google isn't exactly the most verbose company when it comes to describing their specific algorithms (for very good reason), so I guess we'll just have to come up with our own best guesstimate. For big companies like WalMart and Target, dropping a few places in the search engine listings for one item in their catalog isn't going to hurt much. But for you and me, it could mean the difference between making a living or striking out. In the end, it could mean that the "passive" income from selling affiliate products isn't so passive at all, if we need to rewrite product descriptions so that they are "our own." And if someone copies us and gets their page indexed first...let's just hope that it doesn't happen.

I believe that there are probably some sort of contacts pages on Google for reporting this type of a problem, but I for one have *never* received a response from Google for any correspondence that I have sent them. This is a little scary since I spend quite a bit of money with their Adwords program each month.