SQL Server Truncates Transaction Logs with Copy Only Backups
I recommend you use the code in one of the two existing answers to validate that t-logs are not being taken.  Depending on the access your users have, someone may be taking backups without your knowledge. 

There was a comment and link by Denis Rubashkin talking about Pseudo-Simple SQL Server Recovery Model Essentially it says that if you are in full recovery and have never taken a full backup (or otherwise disrupted the LSN chain) , SQL knows there is no way to recover, and it does not save the t-logs.  

But given your description:


  the backup appears to truncate the transaction log. The transaction log is about 40GB. Before the backup it is 75% full. When the backup run, it is only 1% full.


I don't think either of the two possibilities above are the cause of you issue. 

I suspect that your backup job sets the database to SIMPLE recovery at some point in the process, this would clear the t-logs.  Then it sets the database back to FULL recovery. This scenario would create the symptoms you are seeing. 

Look through the backup code, if you find that a change to SIMPLE and back to FULL is occurring, you will want to change something.  Either leave the database in SIMPLE recovery all the time, or take regular t-log backups.  Which choice you make is a business decision, dependent on your recovery objectives.  

There is no good reason to be in full recovery if you are not taking t-log backups.

Edit I just noticed another clue in your question.


  nightly of the database Full (Copy Only).


Why are you taking Full (Copy Only) backups?  The only reason to do this is you are taking a single backup and want to preserve the backup chain when you are relying on differential backups for your your recovery.  See Copy-Only Backups 

This clue suggests that there are Full, Differential and t-log backups occuring that you are not aware of, it would suggest that whomever wrote your nightly backup job as copy only was aware of the differentials and wanted to preserve the backup chain. If this is the case, I would expect t-logs to be taken several times a day, the normal scenarios is Fulls once per week, Differentials the other 6 days a week, and t-logs regularly through the day. 

Or it could mean that the person who put the change to SIMPLE and back to FULL just randomly added it because they did not know the reason or impact of copy only either.