For four years now, explains Chris Meadows in an informative Teleread article, the Internet Archive’s Open Library project has been lending digitized copies of print books it owns, on the theory that as long as it didn’t lend the paper book at the same time, it constituted fair use. Meadows finds that strange, as “the Authors Guild had been absolutely gung-ho about chasing Google all the way to the Supreme Court just for serving up snippets, [but] the Internet Archive checking out entire books was somehow beneath its notice.” He contacted the Authors Guild to ask why it was doing nothing about this possible violation, and reports that the organization has now taken action.
Meadows notes that what the Internet Archive is doing is akin to individuals making MP3 files from music CDs and deleting the files if they sell the CDs. Given this analogy, he says the Archive has a point, but that what an individual might ethically do doesn't scale up to the level of a library. He awaits further action as Authors Guild members become aware of what is being done with their books.
Finally, the comments section of the article includes several robust discussion points and is also worth a read.