Forum Moderators: not2easy
If they were to copy the borrowed work for personal scholarly research, then it is still possible that it is legal, but it is much more of a gray area of the law. Distributing that copy to anyone else is a different matter. It also depends how much of the work was copied.
.. don't know what students would say if you made them sign a license agreement for your class materials :)
A bit excessive I think for a class. If they give a copy of their copy to a friend, it could be considered a copyright violation--much like a copy of music, books, etc.
For further assistance, seek an IP (intellectual property) lawyer.