The thing about the situation is that "copying code you found on the Internet" certainly isn't automatically, always legal. That you engaged in copying X from the Internet doesn't make illegal either. Your source for the source code your incorporate into a product doesn't matter, what matters is whether that code is copyrighted and what the license terms (if any) are (and people saying "copyright doesn't apply to machines" are wildly misinterpreting things imo).

Given what's come out, it seems plausible that you could coax the source of whatever smallish open source project you wished out of copilot. Claiming copyright on that code wouldn't be legal regardless of Copilot.

Whether Microsoft/Github would be liable is another question as far as I can tell. I mean, Youtube-dl can be used to violate copyright but it isn't liable for those violations. The only way Copilot is different from youtube-dl is that it tells it's users everything is OK and "they told me it was OK" is generally not a legal defense (IE, I don't know for sure but I'd be shocked if the app shielded it's users from liability). All the open source code is certainly "free to look at" and Copilot putting that on a programmers screen isn't doing more than letting the programmer look at it until the programmer does something (incorporating it into a released work they claim as their own would be act).

The question is how easily a programmer could accidentally come up with a large enough piece of a copyrighted work using Copilot. That question seems to be open.

TL;DR; My entirel amateur legal opinion is that Copilot can't violate copyright but that it's users certainly can.