It's tragic that this lawsuit is causing such a headache for the archiving community. But it was rather brazen for IA to do what they did during COVID. Not to say the appeals court won't see it differently. Although it's possible since the IA is a nonprofit, it might end up okay regardless, but who knows. Copyright is a tricky beast.
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While the books are a great project, I'm stunned that IA didn't take the step to do it as a separate corporate entity, so as to not put the whole enterprise at risk. Surely, someone must have seen that there is a risk going against the deepest pockets in publishing? Or, were they just so all-convinced of their own righteousness that they just ignored it?
As my grandfather said, "Just being right isn't always the end of it, you also don't want to be dead right.". It was about driving, and how sticking to your idea of "being right/having the right of way" is pretty meaningless if you get run over by the other guy being wrong — seems to apply here.
I hope IA doesn't become dead right, but it looks like they are on that path.