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Does paraphrasing a work shield the user of the work from an infringement claim?

In the context of copyright law, copying is understood in more general terms than exact duplication. It is possible to violate one or more of the exclusive rights granted under copyright law in situations where the work is not an exact duplication. Generally, the user of the work will not be shielded from an infringement claim even if he paraphrased the original work as long as the resulting work has similarities that can result only from copying, rather than from coincidence, independent creation, or derivation from a common source in the public domain. This test is referred to as the "substantial similarity test" and includes both literal similarities (i.e. literal or verbatim copying) and nonliteral or comprehensive similarities.

It is also important to emphasize that it is possible to incur in copyright infringement even in situations where the user of the work cites the original source he is paraphrasing, Thus, the combination of attribution and paraphrasing will not necessarily prevent an infringement claim. Additionally, in certain situations this use of copyrighted material may also lead to other serious claims such as false endorsement and invasion of the right to publicity. This is specially important in the case of advertisement.

While paraphrasing and attribution may not shield the user of the work from infringement claims in general, in certain situations it may be acceptable. For instance, in works involving factual information, charts, maps, compilations, etc. paraphrasing and attribution would typically protect the user from infringement claims. In these cases, the courts use a higher standard for establishing infringement since there are only a limited number of ways to express facts. Consequently, the user would typically be protected as long as he is not copying at verbatim or paraphrasing very closely.

References:
[1] Stim, R. "Intellectual Property. Patents, Trademarks, and Copyrights" West Legal Studies.
[2] Black's Law Dictionary 5th ed., (West Publishing, 1979).
[3]
Copyright Act of 1976