It's helpful to go back to the original article, which has more statements by Schmidt:
While I am fine with extending scanners limited
rights that could fall under fair use -- e.g. allowing search, and showing small portions of relevant search results -- I don't have much sympathy for Google's plight. They essentially violated the nature of copyright, and if that sets them back, then they get what they deserve. If you get caught tunneling your way into a bank vault, you can't cite the efforts you put into digging as a legitimate reason to steal the contents of the vault.
And the music industry was able to make the transition from analog to digital and reissue tons of out-of-print material while staying within the confines of copyright law. I hardly see why books ought to be any different.
As to how to improve it, it may not be politically easy to set up, but:
• Treatment of orphaned works in all media should be legislated, not fixed by a class action lawsuit that only applies to books.
• Living authors / valid rights holders of out-of-print works should opt in, preferably with the ability to decide what rights to extend to distributors, rather than opt-out or have no negotiation over rights.
• Explicitly extend "Fair Use" rights to include search functions.