When a library buys (not licenses) a copy of an ebook, it is subject to the same copyright restrictions and allowances as when the library buys a hardback copy. It has no more legal right to make 10 copies of Wikileaks and the Age of Transparency, to lend out to 10 patrons simultaneously, than if it had bought the hardback.
The library may not make multiple copies to sell or lend. It may not make derivative works, such as translations or movies. These are exclusive rights granted by law to the copyright owner. 17 U.S.C. Sect. 106
Allowances: The library may make copies for preservation, replacement, and to fulfill user requests, provided it abides by the conditions set forth specifically for libraries in 17 U.S.C. Sect. 108. Libraries may lend one copy of a purchased ebook to one user at a time, under Fair Use. (See “Lending library ebooks”).
Additionally, the library may make limited copies or distributions as permitted by copyright law under the limitations and exceptions set forth in 17 U.S.C. Sect. 107 – 122.
Copyright Penalties: $750-$30,000 per title. $150,000 if willful infringement is shown. If a library can show it had reasonable grounds for believing it’s copying or distribution was fair use, it can go to $0. 17 U.S.C. Sect. 504(c).
Note: This is what gave the RIAA its strong arm against individuals who uploaded or downloaded songs from unauthorized sources. The RIAA has issued about 30,000 lawsuits against filesharers. Most settle.
Digital Rights Management (DRM) Restrictions and Digital Millennium Copyright Act (DMCA)
DRM makes it impossible for the average user to make unauthorized copies. The DMCA makes it a criminal offense to circumvent technological protection measures that protect copyrighted content.
Allowances: Every three years, the Librarian of Congress announces exceptions to this rule. The current exceptions are narrow, aimed at allowing individuals to use works in lawful, noninfringing ways. One example is that users are permitted to circumvent DRM in order to enable a book’s read-aloud function or enable a screen reader to render text into a specialized format.
DMCA Penalties: First time offenders may be fined up to $500,000, imprisoned for five years or both. 17 US.C. Sect. 1204.