(Can I say how much I despise JBig compression? Of course I can. Will anyone reading this have any idea what I'm talking about? Of course not.)
It was indeed ruled infringing. However, "a reference guide based on existing books" was not; just this case. At a quick overview, he seems to have quoted a hair too much, and not have arranged things in quite a unique enough way. In LJ's Fandom_Lawyers, Heidi8 points out that "they only awarded damages of $750 - the minimum allowed per statute - for each of the nine books."
(Sometime soon, I'll have a searchable version of the PDF available if anyone would like that.)
Issuing an injunction in this case both benefits and harms the public interest. While the Lexicon, in its current state, is not a fair use of the Harry Potter works, reference works that share the Lexicon's purpose of aiding readers of literature generally should be encouraged rather than stifled. As the Supreme Court suggested in Campbell, "[b]ecause the fair use enquiry often requires close questions of judgment as to the extent of permissible borrowing" in cases involving transformative uses, granting an injunction does not always serve the goals of copyright law, when the secondary use, though edifying in some way, has been found to surpass the bounds of fair use. Campbell. 510 U.S. at 578 n.10. On the other hand, to serve the public interest, copyright law must "prevent the misappropriation of the skills, creative energies, and resources which are invested in the protected work." Apple Computer. 714 F.2d at 1255. Ultimately, because the Lexicon appropriates too much of Rowling's creative work for its purposes as a reference guide, a permanent injunction must issue to prevent the possible proliferation of works that do the same and thus deplete the incentive for original authors to create new works.
---------- In addition to injunctive relief, Plaintiffs seek statutory damages in this case. ... Since the Lexicon has not been published and thus Plaintiffs have suffered no harm beyond the fact of infringement, the Court awards Plaintiffs the minimum award under the statute for each work with respect to which Plaintiffs have established infringement. Plaintiffs are entitled to statutory damages of $750.00 for each of the seven Harry Potter novels and each of the two companion books, for a total of $6,750.00.