Is It Legal to Rent eBooks?

Gutenberg gets his first Kindle

Dear Rich: Do the the same copyright laws apply to electronic books as physical ebooks, in case of libraries? Can libraries buy an ebook from an independent retailer and lend them to their patrons, in the same way as they lend physical books? Also, if I have a physical book and I convert it to an ebook by scanning and destroying the original physical book, do I violate any copyright laws? As to your latter question, we think you're asking "Can I scan a physical book into electronic format if I later destroy the physical book?" No, copyright law prohibits the making of copies of books, whether it's a photocopy or PDF. So home-made eBooks are a no-no. And destroying the original print book -- though you're entitled to do so under the first sale doctrine -- doesn't enable the right to copy, either. However, there are academic exceptions for making archival copies of some books.
Can I set up an eBook rental business. There are two hurdles to setting up an eBook rental business. The first is that most eBooks are licensed, not sold. When you buy a book via Kindle or through the iBooks store, for example, you have pre-agreed to the licensing rules which limit your use to the selected and approved devices. Similarly, many publishers who sell directly require end-user licenses (even those spreading the word of God). So, regardless of copyright law, these agreements prohibit further eBook distribution. Second, if the rental of eBooks is uncontrolled -- there are no mechanisms in place to limit copying -- it may be perceived as a means of encouraging infringement, especially if your site earns revenue from third-party advertising subscriptions, or some other form of revenue. In that case, you may have to fend off DMCA notices and claims of contributory or vicarious copyright infringement.
How do libraries do it? Libraries enter into agreements with eBook distributors such as Overdrive and EBSCO who, in turn, have entered into agreements with publishers. These agreements establish the end user's rights, digital rights management systems, and the limitations under which the library must operate.