Technically, that assumption is correct. Anything you create is copyrighted, but unless you register your work with the U.S. Copyright Office you will never be able to defend your claim. If someone steals your work, you are free to take legal action, but judges like to see formal proof of intellectual property rights.
As far as the courts are concerned, simply claiming ownership does not confer it. Sending yourself a manuscript in the mail, and leaving it unopened, does not qualify as proof that you wrote it. It only proves that someone wrote it.
What is copyright?
Copyright is legal protection for any expressive work, published or unpublished, that appears in tangible form: books, articles, screenplays, dramatic works, poetry, images, songs, software, and architecture all fall under the umbrella of copyright. Work that appears online - your blog, let's say - can also be copyrighted. Having a copyright gives you legal grounds to sue someone who plagiarizes your work.
Your rights as the owner of any expressive work include reproduction, distribution, display, performance, and adaptation. As owner, you may assign or sell some (or all) of those rights either temporarily or permanently. While it is best to copyright your work as soon as it is finished, you can copyright any intellectual work within five years of its creation.
What can't be copyrighted?
Titles cannot be copyrighted, nor can names (including domain names), slogans, or taglines (although these can be covered under a Trademark). News items and historical facts are not covered. Likewise, ideas cannot be copyrighted.
After the publication of Dan Brown's The Da Vinci Code, two authors, Michael Baigent and Richard Leigh, sued Random House claiming "non-textual infringement in a literary work." The basis for the suit was a nonfiction book they, along with a third author, had published in 1982, The Holy Blood and the Holy Grail, in which they proposed that Jesus and Mary Magdalene were married and had produced a child, and that a secret society protects their descendants from the Catholic church. While this is remarkably close to Brown's book, and may in fact have been the source of his central premise, the lawsuit failed because copyright only extends to the expression of an idea, not the idea itself.
Author Lewis Perdue also sued Random House on similar grounds, claiming that Dan Brown had plagiarized characters from two of his novels. He lost as well. Characters, like premises, are ideas.
The fee for registering a copyright is $85 (which is more than quadruple what it was when I registered my first copyright). Authors who are used to doing things on the cheap may balk at the expense, but it is well worth it. Even if you spend nothing else on your work, spring for registering your copyright.
What to do when a publisher wants to copyright your work
Unless a publisher specifies that the book will be copyrighted in your name (and offers to send you proof), do not give your copyright to a publisher.
My first book was published by a small publishing house, the owner of which sent me what she called a "boilerplate" contract. (There is no such thing. All contracts are negotiable.) One of the clauses stated that the publisher would hold the copyright of my book. I balked, although I wasn't sure what the details of copyright were, and refused to sign the contract. Reluctantly ("Oh, all right.") the publisher agreed. Years later, when the book had gone out of print, I hired a lawyer to restore my rights. (Had the out-of-print clause been better worded I would not have needed a lawyer, but that's a topic for another post.)
Subsequently, I self-published a second edition, which sold significantly more copies than the first edition. Had I given up my copyright, a second edition probably would not have been published, and the book would simply have died.
Underhanded ways of obtaining copyright
While most publishers are happy to give copyright to their authors, securing rights for the duration of the copyright in effect gives publishers a de facto copyright. Authors Guild has objected to this practice, stating in its Fair Contract Initiative:
"There’s no good reason why a book should be held hostage by a publisher for the lifetime of the copyright, the life of the author plus seventy years—essentially forever. Yet that’s precisely what happens today. A publisher may go bankrupt or be bought by a conglomerate, the editors who championed the author may go on to other companies, the sales force may fail to establish the title in the marketplace and ignore it thereafter, but no matter how badly the publisher mishandles the book, the author’s agreement with the original publisher is likely to remain in effect for many decades."The Authors Guild has proposed three changes: (1) time-limited contracts, (2) a clause that provides for reversion of unexploited rights, and (3) a specific new unchallengeable definition to replace historic “out of print” clauses that are not remotely relevant in the electronic age. While publishers may be reluctant to issue time-limited contracts, the second and third suggestions are not only possible, they were part of my contract with Random House, which means they can be included any contract.
With shorter works, such as short stories, no literary magazine should ask for rights for the length of the copyright. Literary magazines typically ask for first North American serial rights, which gives them permission to publish your story first in North America only. Rights to short stories usually revert "upon publication." If the literary magazine also publishes a yearly anthology they may require an extension of those rights for up to a year. Any longer than that is not reasonable. Because short stories published in literary journals have a short shelf-life, rights that last for the length of the copyright effectively prevent authors from keeping their stories alive through reprints and collections.
Copyright for news pieces is often owned by news media under "work for hire" stipulations. But this is not the case for literary magazines, unless you are expressly hired to produce work for the publication. Being paid for an original short story or nonfiction piece that you have submitted, or receiving an advance, does not constitute work for hire.
Can someone else quote what you have copyrighted in their own work?
The simple answer to that question is yes. Anyone can quote what you have copyrighted, provided that it is in a different context. This is called "fair use." (Fair use stipulations are located in Section 107 of the Copyright Act.)
A good example of fair use is when a reviewer or journalist excerpts portions of your novel. Because the context has changed, your work has now been "transformed." For nonfiction, any scholar or researcher can quote your work in the context of a book or article discussing similar material. Teachers can also make copies of your work to use in a classroom.
Contrary to popular belief, there is no set amount - 10%, 20%, 30% - that constitutes fair use. What is important is not the quantity, but how it is used. As long as the context has been changed your work can be quoted. Because fair use falls under the First Amendment right to free speech, permission from the copyright holder is not required.
Do this now
Don't wait until you have finished your book to find out about copyright protection. Go to copyright.gov and read the FAQs. In spite of their plethora of circulars - which rival the IRS in sheer quantity of excess verbiage - registering a copyright is fairly straightforward: You pay the fee, and you send them your work. They then send you a certificate of copyright, which you will keep in a safe place.
Always copyright your books! If you don't, you will have no protection against intellectual property theft - a practice which, sadly, is rife in the publishing industry. If you send material to beta readers or to reviewers before publication make sure you have added a copyright notice.