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They lost here on both regular CDL and the National Emergency Library "uncontrolled" variant.

The court's decision and conclusion is almost entirely about just regular CDL:

"This appeal presents the following question: is it “fair use” for a nonprofit organization to scan copyright-protected print books in their entirety and distribute those digital copies online, in full, for free, subject to a one-to-one owned-to-loaned ratio between its print copies and the digital copies it makes available at any given time, all without authorization from the copyright-holding publishers or authors? Applying the relevant provisions of the Copyright Act as well as binding Supreme Court and Second Circuit precedent, we conclude the answer is no."

(emphasis added)

Well, that is a disaster. I'll have to read more, I hadn't realized that.
Yeah the posture and discussion on that is basically "we don't even need to go into the NEL because CDL as a whole isn't fair use."

There are some limiting principles... the lower decision only covered books that were "in print" in eBook form... but the rationale here is quite broad and would easily stretch beyond these specifics. (There's a small amount of analysis related to whether the digitization involved in CDL is "transformative" that rests on official publisher eBooks being available, but there's a strong overall impression that the decision would come out the same way for things not already available digitally.)

So what I'm mad at is not that IA did CDL and imperilled thier other work -- it's that instead of doing CDL in a way most likely to result in a successful case if sued, they did it in a reckless not-C way that resulted in a bad case that ruined CDL, where maybe a better case with better facts would not have.

In a more reasonable world we could imagine Congress might pass a law authorizing actual one-copy-per CDL by non-profit libraries. But nobody's going to hold their breath for that.

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> the lower decision only covered books that were "in print" in eBook form

This is actually a pretty significant limitation, because so much of what was practically available as CDL was actually out-of-print books that the publishers never bothered to make available for eBooks licensing. It's at least reasonable to expect that the fair-use analysis might tilt the other way for such books - the use is a bit more "transformative" because at least it technically contributes something that the publisher didn't, and the potential of market harm wrt. the copywritten work becomes a lot more speculative.

My hope is that doesn't mean you can still digitize media that's on a dying format and that can still be used in CDL. Like if you owned a legitimate copy of a movie on betamax that format has been dead for years you can't buy a new betamax player you can digitize that before the tape becomes unreadable. That's been explicitly in copyright law last I looked and it's just a matter of defining what media is "dying" enough to count under this.
It's unfortunate that IA did CDL so poorly. In the original findings it came out that they were not controlling the print copy, so they were never really doing CDL. Also, it was super shady to send people to their own used book store from the digital copies. Really just a bad first case for CDL.