What can OCLC be thinking? That they need to protect their intellectual property...property that they bought and paid for and spend a lot of resources maintaining.
The hotel is making money from a concept that is trademarked. It's not like it was just a fun idea that they're not getting paid for...or that they just did a thematic grouping based on, say, LC, which I believe is probably in public domain, since it's created by the government (although I'm not sure about that). OCLC has a right to sue. Libraries pay for using the system. Certainly a business that is merely using it as a gimmick should.
My gripe with the hotel, as someone who was trained in cataloguing (read had DDC and LC beaten into her during school), is that not only did they co-opt a trademarked system...they mucked with the DDC.(Heretical use of canon!) If you go to: http://www.libraryhotel.com/concept you'll find that they start with the 300s on the third floor (so far, so good) and continue through the 900s on the ninth floor. Then...they just start putting in the first part back in and changing the numbers. So, instead of Paranormal being 130.4, on say, the first floor, etc., it's on the 11th AND called it 1100.005. So, they took a recognisable system and then messed with it, instead of, say, starting with the 000s without trying to match floors or just going with a thematic grouping without gimmicky numbers, thereby minimising their vulnerability to the lawsuit.
I'm sure it never occurred to the people at the hotel that the DDC was trademarked (maybe they should have asked a librarian) any more than it occurs to many of our patrons they may be violating copyright law. But they are still culpable and I expect there will be an out-of-court settlement. But I can't see organising a protest--aren't we supposed to support intellectual property rights as librarians?
My understanding from reading the news stories is that OCLC made attempts to contact the hotel prior to filing the suit and were rebuffed. Certainly, the hotel has gained a lot of publicity from this, so they may even benefit from the suit.
Ah, the crazy world of business.