I just learned from Public Knowledge that Google has temporarily suspended its Library Project. (See also the same article at WiredNews.)
I previously wrote about the project on this blog. Given the nature of the imbalance in current copyright laws, I'm not surprised that a temporary suspension of the program is in place while the publishers and Google attempt to work out a resolution. The fair use question is somewhat novel, and here's how Google views the fair use of making a scanned copy of copyrighted texts:
"Does scanning comply with copyright law?
Yes. The use Google makes is fully consistent with both the history of fair use under copyright law, and also all the principles underlying copyright law itself. Copyright law has always been about ensuring that authors will continue to write books and publishers continue to sell them. By making books easier to find, buy, and borrow from libraries, Google Print helps increase the incentives for authors to write and publishers to sell books. To achieve that goal, we need to make copies of books, but these copies are permitted under copyright law.
This project is very similar to web search. In order to electronically index a webpage, you need to make a copy of it. In order to electronically index a book, we have to make a digital copy of the book. As with web search, the copies we make are used to direct people to the books. Our experience with web search is that many people ask to have their web pages included in our search results and very few ask to be excluded."
Here's a link to Google's announcement.