From The Chronicle of Higher Education:

Title: U. of Michigan Adds Books Digitized by Google to Online Catalog, but Limits Use of Some

Frpm the article:
As it works with Google to scan nearly all the books on its shelves, the University of Michigan at Ann Arbor has decided not to make full-text versions of copyrighted books available online, even to on-campus users…Some observers had wondered whether the university might make full-text versions of copyrighted books available at on-campus computers, but Michigan officials ruled out that option early on. “We don’t believe that fair use allows us to make that kind of access available to our user community,” said John P. Wilkin, an associate university librarian.

Also from the article:
If a scanned book is still under copyright, though, users will not be able to read the digital copy. Instead, the card-catalog* system will return a list of the pages that contain the search term and how many times the term appears on those pages. The reader will be directed to the library's stacks for the printed book."

Comment:
In essence even though the university will get a complete scanned copy of every book users who use the U of M OPAC (aka card catalog) will not be able to see the entire book online. This is similar if not identical

http://books.google.com/intl/en/googlebooks/screenshots.html#snippetview

what a non-U of Michigan user will see when they come find an in copyright scanned book online. They will only see snippets.

Btw, the term card-catalog has not been used in the library world for nearly 20+ years. These databases are now referred to as OPACS (Online Public Access Catalogs) that are modular and handle everything ffrom a user search, to cataloging, to billing.