I do not have any particular opinion on this. However, do you think it would be OK for the IA, or another entity, to purchase a physical book, create an audio book from it, and lend the audiobook in a manner similar to what the IA is doing now? Regardless of your opinion, the "transformation" of this matter is effectively what the plaintiff is arguing against with respect to paper book to digital book.

If the answer ends up being that it's fine (I imagine in either scenario it will end up being appealed to near the Supreme court), it would have pretty interesting implications.