Right, but digital lending looks a lot more like software licenses where libraries buy "seats" that correspond the number of simultaneous borrowers. If you have more borrowers than seats you've violated copyright.

Most libraries work with publishers to buy lending rights directly but IA is arguing that if I hold one physical copy of a work and promise not to "perform" (copyright jargon is odd) it while it's in my possession then I may transmit that work digitally to another person kinda bridging first sale and seats of digital lending licenses.

I guess we'll find out if the court buys it. Because under normal circumstances this is open and shut copyright violation.