What Internet Archive did is digitized physical books, then loaned out their “one copy” with DRM. Their assertion is that this constitutes fair use. I don’t really think there’s any merit to that argument based on the law and the body of precedent, and fundamentally tend to dislike legislation from the bench (judges just arbitrarily reinterpreting laws). Passing new laws and restructuring how IP law works is the job of the legislature, not the judiciary.
IA then made this worse by taking the already super tenuous “fair use” argument and throwing it out the window by removing the lending limits during Covid. It was waving a red flag in front of IP holders and begging them to take aggressive action.