That law is not about digital lending and cannot be applied to digital lending.
That’s provably incorrect.
“it is not an infringement of copyright for a library or archives […] to reproduce no more than one copy or phonorecord of a work”
Title 17, USC 101 defines a copy as “…material objects, other than phonorecords, in which a work is fixed by any method now known or later developed, and from which the work can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device…”
Digital replication falls under the legal definition of copying in the US Code, and is directly cited in the prior section of the code I reference in my last reply.
The Internet Archive’s loans also utilize DRM, a standard kind of software used by every other library out there to restrict further replication of copies. This same technology is in use with libraries who have contracts with publishers to directly download and publish digital copies of non-printed ebooks, which would violate that contract by not using DRM. The Internet Archive, without any express contract from publishers, is still implementing the strongest measures of protection that the publishers themselves would require whether or not content was directly licensed from them instead of being scanned in from a physical copy.
It’s relevant because it forced the hands of the publishers to take action.
Nothing forced them to do anything. These publishers voluntarily decided to file a lawsuit because of mounting pressure from libraries as a collective to stop charging insanely high prices on ebook rentals from publishers, which they saw as being undermined by the fact that the Internet Archive was able to still pay for the books in question, but lend them out in the same manner that physical books are already lent, just through a screen.
As I mentioned before, if the Internet Archive had never done this in the first place, public outcry would be practically nonexistent, and the Internet Archive wouldn’t be lending out those books at all, just like they’re not legally able to now. There is no difference to if they had or had not done this, other than the fact that it is now more visible in the public sphere, and has active legal challenges instead of being quietly subverted by regulation and practices publishers have continued to mount against all libraries to re-establish what it means to own a copyrighted work.