I'm not surprised. Cornell University along with the American Association of Publishers has developed a set of copyright guideline which states that the same fair use principles apply for electronic copies of documents placed in course management systems as do for print copies. In other words, it's not fair use to merely put electronic copies of texts in a password protected website. The copyright clearance center has a brochure outlining this new policy.

As I said, I'm not surprised. I predicted this in my dissertation, "The Future Is Open" for Composition Studies: A New Intellectual Property Model in the Digital Age. I've included the relevant text below for those that are interested:

In defining five basic changes to copyright law that the TEACH Act permits, Laura Gasaway suggests that

it removes the concept of the physical classroom and recognizes that a student should be able to access the digital content of the course wherever he or she has access to a computer. (82).