I don't think etsy is too worried about it simply beacuse they do include in their terms of service that you cannot list copyrighted works. So if someone does list it, it is their fault,a nd not etsy's. Meaning that it's more likely that the copyright holder would sue the user, rather than etsy.
Etsy might get some reprecussions for not taking them down immediately, but they wouldn't get the full force of the lawsuit upon them.
And as previously stated, they're too busy with piracy to worry about it. Though I have seen listings on ebay taken down due copyright issues. People selling cross stitch patterns of copyrighted works, like Harry Potter, or Nintendo characters. But I couldn't verify whether that was due to a copyright holder bringing it up, or simply ebay itself taking it down.
EDIT:
After a quick search, I found this:
http://www.etsy.com/storque/how-to/etsy ... ement-498/
It basically says that etsy does not feel that they should be the ones deciding whether something is copyright infringement or not. So they won't take anything down unless the copyright holder requests it.
At least, that's what I gathered from it.
Under United States copyright law, only the legal or beneficial owner of an exclusive right under a copyright is entitled to take action. In other words, copyright owners are responsible for policing their own rights and bear the cost of policing. It must be the copyright owner — not a simply well-intentioned member of the Etsy community — who reports copyright infringement and ultimately decides what uses are permitted and what uses may violate rights.
If you were to discover that an individual had utilized your copyright protected work, it's up to you to decide how to proceed. You may find that the use is absolutely fine. In fact, this use could bring you great publicity! You may choose to ask the person to enter into some sort of agreement to use your work. On the other hand, you may decide that you want the use to stop. The choice is up to you (and maybe your lawyer).
