A couple of things. As soon as you write something down, it is technically copyrighted unless you relinquish the copyrights (for example declaring the work under creative commons).
When a publisher publishes a book with an ISBN, the ISBN stays with that book forever. Even if a publisher lets the book go out of print, the ISBN stays with the book so it can be identified in systems as the out of print edition. If the author then decides to republish the book once the rights have reverted back to them, they can do so under a different ISBN.
So in the case you describe, if the author has not sold the rights for the digital format, the author retains hose rights and can publish the title in the digital format (kindle or nook). It would be under a different ISBN than the previous edition.
When a publisher publishes a book with an ISBN, the ISBN stays with that book forever. Even if a publisher lets the book go out of print, the ISBN stays with the book so it can be identified in systems as the out of print edition. If the author then decides to republish the book once the rights have reverted back to them, they can do so under a different ISBN.
So in the case you describe, if the author has not sold the rights for the digital format, the author retains hose rights and can publish the title in the digital format (kindle or nook). It would be under a different ISBN than the previous edition.
