It's official, Microsoft wants you to copy digital files - just not theirs. Follow me.

"Fair use" is a legal principle now enshrined in US law and precedence. It allows that someone who purchases some intellectual property, such as music or a book, is entitled to copy that property for their own use.

For example, it is not against the law for me to make a cassette copy of a music CD so that I can play the tape in my car.

Windows XP, the new operating system from Microsoft, contains many new features for creating (that is, copying) digital files from CDs onto the computer's hard disk, and then categorising them, and finally playing them back.

Playing music on a computer, or a computer-like device, is now a major selling point and Microsoft wants to make it as easy for its customers as possible.

Yet this same operating system has embedded within it technology that is meant to prevent users from making casual copies of software onto multiple machines. In other words, loading Word onto my laptop, when I actually only bought it for my desktop computer, is no longer possible (legally possible, that is).

This isn't a piracy issue - the encryption that Microsoft uses is so weak that it has already been broken and, in any case, it has been argued that there is no encryption that can't (and won't) ultimately be broken. So the protection mechanism built into Windows XP isn't aimed at the bulk counterfeiters, who really are criminals. Instead, it is aimed at preventing us from buying and using it more than once.

Is this reasonable? At first, it may seem so. But in fair use terms, what is the difference between playing a song in the house and then in the car, and using software on a desktop machine and then on a laptop? As long as both aren't used at the same time (admittedly, a loose and difficult standard), in what way is that stealing software? At least, in what way that is conceptually and morally different from recording a CD and then playing it some place away from home?

Apple is playing the same game with the release of its new iPod, a portable MP3 player. Apple advertises this device with lavish photography and, in small print, the words "don't steal music". Is this less, or more, like selling heroin and labelling it "for medical purposes only"?

This issue also applies to movies supplied on DVD and it has opened a can of worms that is headed for the US Supreme Court.

Hollywood has never been comfortable with consumer technology. Sony had to go to court to establish the right to sell the first VCRs because the studios were so afraid that this would lead to their wholesale economic slaughter. In fact, films on video tape have become a vital part of Hollywood's income stream.

The next turn of this cycle is DVD. Films on DVD are quickly pushing aside videotape as the medium of choice for consumers and for studios. This is fabulous news, since people now seem to want to buy DVDs instead of rent them. This means that each transaction is now $18 (€20.50) to $30, instead of $4.

But, ever-terrified studios initially refused to provide content (i.e. films) unless there was some kind of copy protection built into each DVD. Since a copy of a DVD is just as good as the original (unlike with VHS tape), they were afraid of only selling one copy of each film and then losing control, as the films were passed around freely after that. So far, so good.

But along came the Linux operating system, a free alternative to Windows (and Apple). People who owned Linux computers wanted to be able to watch DVDs on them as well but there were no players for that platform.

At first glance, this does not seem an unreasonable desire. If you buy a DVD, you should be able to play it on any computer. Theoretically, that's your right of "fair use".

Not a problem - some enterprising geeks figured out how to decode the encrypted movie data coming off the DVD and all was well. But the Motion Picture Association of America was not impressed and sued to keep this information from being published, initially on a website.

So what started out as a "fair use" issue has now become a "free speech" issue.

Last week, the sixth District Court of Appeal in San Jose, California, ruled that this information could be published but it has not been (at least officially) pending an appeal to the US Supreme Court (unofficially, anyone who cares could already have found the code in a number of places, including on T-shirts and in Technology Review, a magazine published by MIT).

But the real question is, what happens when Apple builds the DVD equivalent of the iPod, a device that can store 1,000 movies and play one back whenever you want? Or is that illegal, while the musical version is not? Why can I copy a music CD onto my computer but not a video DVD?

And later, when Microsoft copies the iPod, and then builds its own version for movies, will it see the irony in promoting tools that aid piracy (though that is not their intended use, wink, wink) while stamping harder on "fair use" copies of its own products?

Copyright law is in a mess and the only thing we can predict with certainty is that the innocent, law-abiding consumer is going to be the one that pays the most, while getting the least.