The Author's Guild has waged a decade-long battle against Google, arguing that Google's practice of scanning entire books and making portions of those books available online violated copyright law. That battle suffered a significant blow recently, when the U.S. Supreme Court refused to hear an appeal of a Second Circuit decision that Google engaged in Fair Use. You can find the full Second Circuit opinion here.
What Google does is relatively simple - the company scans an entire book to make a digital copy, and they do this without the consent of the author. Thus far, Google has done this with millions of books. When a user searches the web for information, Google uses information in its database to display snippets of books relevant to the user's search. Google handles the snippets in a manner intended to preserve the market for the book, and for works like cookbooks, where a snippet might divulge significant information, snippets are disabled entirely. It is also possible for an author or publisher to opt out of the snippet program.
In finding that Google's use was a Fair Use, the Second Circuit emphasized that the use is highly transformative. Whether a use is transformative has become an increasingly important Fair Use factor in recent years, and this case follows that trend. The Second Circuit also noted that Google's commercial, profit-driven motivations do not justify denial of Fair Use.
Some have argued that the Second Circuit got it wrong by not focusing on the Google's act of making the digital copies as a separate act of infringement from the displaying of snippets or using the digital copies to generate search results. Yes, those are separate acts, but I think the Fair Use analysis applies to each act. The making of digital copies is a necessary step in Google's Fair Use of the books, so it would be incongruous to say the search and snippet aspects of what Google does is Fair Use, but the necessary copying step is not. In addition to protecting authors, copyright law serves a public benefit function - that's actually the policy basis for having copyrights. The Google Books case is an example of courts adapting a fluid Fair Use doctrine to changing technology in order to advance the public benefit that underlies copyright.
For more information about this case, check out the ongoing coverage at Techdirt.