"one patron at a time"
That's where the issue is. From the moment you explained this CDL format, even before getting to the lawsuit part, I already knew that something like this will be a problem.
It's a digital form, not paper.
For example, when we all had to use CDs, I can only give people a disk of any movies, one at a time. But with the digital ones, I can send to as many people as possible and still have mine intact.
Even if the library wanted to flow with the clause of 'one patron at a time', it would have still been hard for them to avoid the temptation of sending out to many. Hehe.
Like you said, it would be nice to see how this will turn out.
By the end of the day, it will be all about money. If the authors have a way of getting paid for every copy that is digitally given to readers, they wouldn't be too worried.
The Internet Archive has their system setup that you can't download the book that is on loan. You have to read it on their site within their reader, so they will not be loaning it to more than one. I've used the system. The first time when I got to the end of two weeks and I'd not finished the book I was like, no biggie, I'll just renew the loan. When the loan time ran out and I tried to get it again, I had to go on a waiting list. This is the publishers trying to hold onto control in an industry where people can and do self-publish.