Digital Technology: Legal Issues, Mary Minow, LibraryLaw.com
When considering whether or not an object or set of objects may be legally digitized, consider the following flow chart for decision making:
Is the material in the public domain? If no then,
Does the material fit under Section 108 of U.S. copyright law? If no then,
May the material be posted under fair-use law? If no then,
Have I obtained permission for use from the copyright holder?
Facts, Ideas, Dedicated works (works specifically dedicated to the public domain by their authors), U.S. Government works and Expired works are all in the public domain.
See also "When Works Pass Into the Public Domain in the United States: Copyright Term for Archivists and Librarians", by Peter Hirtle.
The Section 108 Library Exception
Libraries may digitize and put works (that are in the last twenty years of copyright protection) on the web. However, the libraries must make a reasonable investigation to insure that the works are not subject to normal commercial exploitation, are available at a reasonable price, and whether or not the copyright owner has filed a renewal notice with the Copyright Office.
Section 108 is the same legal stipulation that allows libraries to permit photocopying of copywritten works, so long as the library does not make a profit off of these photocopies.
Digitization efforts may, in many cases, post materials under a “fair-use” argument. Fair use determinations of copywritten materials are based upon the Purpose of one’s project, the Nature of the project, the Amount of the copywritten work utilized and the Market impact of the use vis-à-vis the original work.
Even if found guilty of copyright violation, damages to non-profit educational institutions may fall to $0 if the institution has demonstrated a good-faith attempt to determine the rights owner for the original work.
Keep in mind that copyright to an original work may have been transferred, descended to heirs, etc. Note also the various sets of good disclaimer language posted online by the Library of Congress.