There was a good article posted previously here on HN about the lawsuit.

There is something in the current framework that allows libraries to lend out digital copies — by having purchased a physical copy. They can lend out one digital copy for each physical copy they hold.

What Internet Archive did was, during Covid, opened up lending to exceed the physical copies they held. They did not ask the copyright holders when they did this.

They broke the law, and their case has no legal merit. Their argument was to appeal to public opinion. The results of the lawsuit may jeopardize their main mission.

I really respected the IA, but how they are going about this is dishonest.