When working with archival material, it is not always possible to determine a work's copyright status. When determining whether materials should be digitized for research, libraries should conduct a fair-use analysis, considering the four factors listed in the Copyright Act for determining whether a particular use is fair.
The nature of the work refers to whether the work was published (more likely to be considered a fair use) or unpublished (less likely to be considered a fair use) as well as whether the work is factual/historical in nature (more likely to be a fair use) or highly creative (less likely to be a fair use).
This factor considers how much of the protected work was taken. Did you make a copy of just a paragraph? Or did you copy an entire book? It is also important to consider the quality of the work taken, not just the quantity. For instance, courts take into account whether the "heart" of the work was taken, not just whether a substantial portion was reproduced.
In this factor courts generally consider whether the use of the copyright protected work would replace the market for the original work. For instance, if I copied and pasted an entire book of the Harry Potter series online then individuals wishing to read the book would no longer have to purchase the book and the author of the book would be harmed. Thus, that would not be considered a fair use. However, if I wrote an essay, a piece of fan fiction using the names and likeness of the characters from Harry Potter but with a new plot, perhaps it would not easily replace the original and would not supplant the marketplace of the Harry Potter book sales (however, remember that derivative works are also under the control of the author, so if the new piece of fan fiction were not transformative enough, it likely would not be considered a fair use overall--remember that all factors, not just one, need to be weighed when considering fair use).
There are many useful online tools to utilize in order to determine whether a particular use is a fair use. It is a good idea to document your fair use determination and keep it on file. Remember to make case-specific determinations, not global ones. For instance, instead of completing one fair use checklist for the use of 13 images in an article, complete 13 separate checklists and keep them on file. If you determine that the use is not a fair use, seek permission.
Greg Cram from the New York Public Library discusses the application of the four factors in a project to digitize a collection related to the New York World's Fair.