Here's the complaint (PDF Link), and here's a snip from a story by Elinor Mills at CNET:
The Authors Guild on Tuesday filed a class action lawsuit against search engine Google, alleging that its scanning and digitizing of library books constitutes a "massive" copyright infringement.
As part of its Google Print Library Project, the company is working to scan all or parts of the book collections of the University of Michigan, Harvard University, Stanford University, the New York Public Library and Oxford University and make those texts searchable on Google.
"This is a plain and brazen violation of copyright law," Nick Taylor, president of the New York-based Authors Guild, said in a statement. "It's not up to Google or anyone other than the authors, the rightful owners of these copyrights, to decide whether and how their works will be copied."
UPDATE: 850PM PT, Google's response:
The Google Print program respects copyright. We regret that this group has chosen litigation to try to stop a program that will make books and the information within them more discoverable to the world. Google Print directly benefits authors and publishers by increasing awareness of and sales of the books in the program. And, if they choose, authors and publishers can exclude books from the program if they don't want their material included. Copyrighted books are indexed to create an electronic card catalog and only small portions of the books are shown unless the content owner gives permission to show more.
See also this related AP story, "Google's digital library tests law" Link, and a related paper by legal scholar Jonathan Band, "The Google Print Library Project: A Copyright Analysis," E-Commerce Law & Policy (August 2005) PDF link, and source.
UPDATE : 930PM PT, A more detailed response from Susan Wojcicki, the vice president in charge of Google's Print Library Project:
Google doesn't show even a single page to users who find copyrighted books through this program (unless the copyright holder gives us permission to show more). At most we show only a brief snippet of text where their search term appears, along with basic bibliographic information and several links to online booksellers and libraries.
Here's what an in-copyright book scanned from a library looks like on Google Print:
Google respects copyright. The use we make of all the books we scan through the Library Project is fully consistent with both the fair use doctrine under U.S. copyright law and the principles underlying copyright law itself, which allow everything from parodies to excerpts in book reviews. (Here's an article by one of the many legal scholars who have weighed in on Google Print.)
Just as Google helps you find sites you might not have found any other way by indexing the full text of web pages, Google Print, like an electronic card catalog, indexes book content to help users find, and perhaps buy, books. This ability to introduce millions of users to millions of titles can only expand the market for authors' books, which is precisely what copyright law is intended to foster.
Link to the Google Blog post
UPDATE: 11PM PT — Fred von Lohmann of the EFF says, "I believe Google has a strong fair use defense here." His point-by-point case analysis is here: Link
UPDATE: Xeni's report for NPR News is here.