Can the yarn shop photocopy the pattern from their “Store Copy”?
No. Yarn shops may not photocopy copyrighted materials for the same reason as given above. Even if they do not charge their customers for this “service,” they would receive profit from the sale of related items, such as yarn or knitting equipment, that they would not have sold to begin with without that unauthorized photocopy.3 The only exception here is if the yarn shop has the prior consent of the copyright holder to do so.