How Google flags copyrighted content?

Here is the deal, I'm running a small website for free ebooks and I'm displaying adsense ads. However I've got there a few favorite books that are copyrighted but are helping me quite a bit put the blog on its feet. I am 100% aware of the adsense policies and I know that this is a violation, so don't quote me the user agreement please!
My question is does anyone have any idea how google flags copyrighted material? The only possible way I can imagine is the copyright owner to report me to google. But as I'm too small I don't see this happening. So share your EXPERIENCE and try to be objective what the ACTUAL risk of having like 8% copyrighted material is. We are not talking about freshly published blockbusters, but rather classics with extended copyrights (so not that sensitive for publishers). Furthermore in my About page I have an appeal form for violated copyrights.
As an example of copyright material I can give you is "Ender's Game", published 1985.
Thanks guys!

I don't think Google has any way of determining algorithmically what is copyrighted content or not but they are still going to punish your site anyway if the content is already published on another site as it will be regarded as duplicate content.

Are these pages crawlable? If the books are in a format that is readable by the google bot, then your content will eventually be marked as duplicate. This is probably the worst that can happen.

I didn't even think about it! I have every book in PDF as well, which the bots can read right? Can nofollow help me in this case?
Thanks man!