The ruling clearly addresses this in the section about the application of fair use to the idea of the CDL (that is, where the lending is controlled in the way we’re idealizing) and it was deemed obviously illegal. The very act of making and distributing a copy is what is infringement, and as the ruling clearly lays out none of the pillars of fair use come close to applying as a defense. Crucially, it is not transformative (it’s the same book used in the same way) and the entire work is copied.

The law is bad and it sucks and we need to change it. It’s depressing to me that so many really smart people don’t have a good understanding of this, probably because most infringement usually goes unpunished. We don’t get to deem it okay simply because it logically makes sense that controlled digital lending is obviously equivalent to physical lending. Unfortunately the act of making the copy and then distributing it changes everything.

> "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."