Google and the Association of American Publishers have settled the copyright lawsuit over Google Library Project. The related Authors Guild lawsuit has not been settled.
Here's an excerpt from the Google press release:
The agreement settles a copyright infringement lawsuit filed against Google on October 19, 2005 by five AAP member publishers. As the settlement is between the parties to the litigation, the court is not required to approve its terms.
The settlement acknowledges the rights and interests of copyright-holders. US publishers can choose to make available or choose to remove their books and journals digitized by Google for its Library Project. Those deciding not to remove their works will have the option to receive a digital copy for their use.
Apart from the settlement, US publishers can continue to make individual agreements with Google for use of their other digitally-scanned works. . . .
Google Books allows users to browse up to 20% of books and then purchase digital versions through Google Play. Under the agreement, books scanned by Google in the Library Project can now be included by publishers.
See also the AAP press release.