Do they not understand what copyright means? They are not allowed to make a _copy_ of a book without permission. Traditional libraries and bookstores do not do that... it is a very important distinction that they either seem completely oblivious to, or are intentionally playing dumb. Or they're somehow trying to get the actual definition of a "copy" changed.
Don't get me wrong, I'm all for IA and don't have anything against them... but in this case the court upholds that digital copies are still copies, and thus this is still copyright infringement.