Comment by tpmoney

In Judge Alsup's case, it largely hinged on whether you had a right to the initial copy in the first place. If I read (and recall) his ruling correctly, the initial pirated copy (that is, downloading from a source that didn't have the right to distribute it in the first place) made all subsequent intermediary copies necessary to the training process also not fair use.

So in the case of you and your friends, it isn't the physical location that makes a difference, but whether you obtained the original copy legally, and the subsequent copies were necessary parts of the training process. This is also one of those places where we see the necessity for a legal concept of corporate "personhood". AnthonyMouseAI Inc. is the entity that needs to acquire and own the original copy in order for you and your friend to be jointly working on the process and sending copies back and forth. If your friend stops being an employee of AnthonyMouseAI Inc, they can't keep those copies and you can't send them any more.

Can you and your buddies do this without forming a legal corporation or partnership? Sure. Will that be a complicating factor if a publisher sued you? Probably.