For decades a legal version was available called "The New Real Book", but "The Real Book" was the name of the original*, unauthorized fakebook - preferred by every jazz musician I met - until the latest edition when the rights were finally secured by a major publishing house with edition 6.
*I used the term 'original', but to my knowledge fakebooks were around since the 20's or before. "The Real Book" was already a play on that back in the 70's. And typically none of them were authorized.
EDIT: Sorry for haphazardly continuing to update this but I was trying to dig up more. Here's the link I was trying to find[0] With previous discussion here on HN[1]. It states, 'They called them “fake books” because they helped musicians fake their way through unfamiliar songs.' However, it's certainly not the only possible explanation.
I think "fake it till you make it" is the proper understanding; similar to guitar tabs.
Wikipedia has "It became so popular that the books was eventually "legitimized" by publisher Hal Leonard, and re-released in a series of editions and transpositions for various instruments" so maybe it was both, kinda.
Myself, I gave up on fake books more than 20 years ago, because I thought that they weren't helping my playing any more. They are a crutch. Do you really need to read Blue Bossa?
According to legend, the publishers decided to stop going after the illegal fake books, preferring to get their royalties from performance licenses. It's hard to sue a bunch of penniless musicians into oblivion.
Yeah, that’s because the definition of “fake book” is “lead sheet,” regardless of licensing. My theory is about the etymology of the term, not the definition.
Since we're getting into technicalities, a "lead sheet" is not exactly synonymous with "fake book". A fakebook encapsulates a particular sort of standard repertoire, it is a curated assemblage of standards as much as it is sheet music. As such it's almost impossible for a fakebook of the most general sort to be fully licensed. (And when Hal Leonard came out with the legal Edition 6, many musicians rebelled and stuck to the pirated older editions because they covered the genres more comprehensively).