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Plagiarism is "the unauthorized use or close imitation of the language and thoughts of another author and the representation of them as one's own original work." That is, both imitation (or outright copying) and failure to be truthful about that imitation are necessary attributes to call it plagiarism. It is possible to copy or imitate openly without quoting the original work word for word (pastiche, parody, satire, homage); it is the lie (of commission or omission) about sourcing that makes it plagiarism. (Fanmakes and related tropes such as songfics are often put into this category.)
Many opponents of fan fiction (and even some fanfic fans) will tend casually to describe it as plagiarizing its source text. This is an inaccurate use of the word; fan fiction is (usually) unauthorized re-use of language, characters and scenarios, but few, if any, fans actually claim that they created those characters and scenarios. Thus, sourcing being obvious, it is a sloppy usage to call fan fiction plagiarism.
When accusations of plagiarism occur within fandom, they are usually in response to a fan taking an existing fanwork (often from another fandom) and changing character names in order to portray it as their own. Sometimes other situations where fans do something with the stories of other fans (e.g. Responsefic) are erroneously perceived as plagiarism by some. When the issue at hand does not involve the story of another fan, it often turns into a controversy.
Notable Accusations of Plagiarism
Cassandra Claire, a Harry Potter fan writer, was accused of lifting passages from many other sources, including Buffy the Vampire Slayer, Babylon 5, Red Dwarf, and Blackadder, in her fanfic series The Draco Trilogy. However, the most numerous and extensive text matches were to Pamela Dean's The Secret Country Trilogy. Originally, there were few acknowledgments of the original sources, and Cassie Clare never published a complete list of "borrowings". Some critics, including redcoat, attribute this to the cultural climate of that particular corner of fandom at the time. In The Cassandra Claire Plagiarism Debacle, Avocado noted that both Cassie and her fans thought that plagiarizing other sources within fanfic was perfectly acceptable.
In Lord of the Rings RPS fandom on LiveJournal, Namarie120 wrote a Viggo/Orlando fic called A Hidden Passion, which used not only the plot, but also extensive textual quotes from Charlotte Brontë's Jane Eyre. Later the author changed the character names again and published A Hidden Passion as an "original" novel by Lucia Logan in 2007. An online reviewer, Erastes, recognized large passages as copied from Jane Eyre, and criticized it on their site. The publisher withdrew the book from distribution.
Some fans knew and didn't care about the plagiarism very much, but most did not know about it. Namarie120 continued to accept praise and fandom awards for the story. This lasted until caras_galadhon discovered the plagiarism and posted her response , and the issue was taken up by other journals. During this time, Namarie120 deleted her journal. Then she returned, but removed awards banners from her profile and marked all her posts as private or friends-locked.
Ozmandayus, plagiarized from X-Files fandom, published in Buffy, Smallville, Dark Angel and Power Rangers.
In summer 1999, a writer named Jade posted a story in Gundam Wing fandom lifted directly from a Highlander story written by Suze. Word spread across mailing lists in multiple fandoms so that people could check her websites (yes, plural) for any other potentially stolen stories. At least three more of "her" stories were found to have been stolen from Highlander writers (Suze again, and Luminosity), and two poems were found to have been stolen from long-dead authors. The fannish reaction was severe -- the proof was irrefutable (she changed little more than the names), and her excuses were pathetic, starting with "oh, the other author and I are friends and wrote that together!" (much to Suze's surprise, since she'd never heard of this person before) to "oh, a friend asked me to post those for her so her parents wouldn't find out she was writing fanfic" right through to "my little sister posted that, I had nothing to do with it, we just share the same email address".  Rightful was written by Sleeps With Coyotes as a response to the situation.
By the time it was all over, she was connected to multiple aliases: Raven, Deedlit, Trinity O'Reilly, Jozlyn Malloy, and Gwen Deviere.
Perhaps the only known instance (so far) of a pro writer plagiarizing the writing of a fan writer. Another Time, Another Place was originally a Chakotay/Paris AU by Voyager fanfic writer Mort. It was first posted in 2003 and depicted Chakotay and Paris as two detectives hunting a serial killer. Several years later the serial numbers were filed off by J.J. Massa, and the story was professionally published under the title The Edge, first as an ebook from Venus Press in 2005, then as a paperback from Linden Bay in 2007. Eventually the plagiarism was discovered and the book was pulled by Linden Bay.
- Wikipedia:Plagiarism (accessed 2008-10-11)
- See Cassie Claire and her fans' reactions to the ff.net ban as quoted in The Cassandra Claire Plagiarism Debacle -- Part V (post 1). At least one fan claimed that it was okay because fanfic itself was a form of plagiarism: "the nature of the allegations are in direct conflict with the very nature of fanfiction. I'm an English teacher. Plagiarism (see, I can spell it!) bothers me and bothers me badly. Yet I write fanfiction."
- Crimes of Fanfic, posted 2006-08-06 by John Scalzi (accessed 2008-10-11)
- The Cassandra Claire Plagiarism Debacle  in Journalfen's bad_penny community, posted 2006-08-04 by avocado (accessed 2008-10-11)
- Plagiarize, plagiarize, plagiarize! Only be sure always to be calling it 'research.' posted by redcoat, 2006-08-07 (accessed 2008-10-11)
- A Hidden Passion: Lucia Logan. Far too close for comfort by Erastes, September 25, 2007. Update on "A Hidden Passion" by Lucia Logan by Erastes, October 5, 2007.
- Plagiarism and LotRPS by Caras Galadhon, March 14, 2008.
- Plagiarism in fandom MSilverstar, 2008-03-13
- Ozmandayus the Plagiarist
- Summary: Stop, Thief!; details and quotes: Plagiarism Runs Rampant; reaction in Jade's Guestbook. All via Wayback Machine, all accessed November 21, 2008.