Google’s $125 Million Digital-Library Settlement Rejected by U.S. Judge

“A U.S. judge rejected Google Inc. (GOOG)’s $125 million settlement with publishers and authors, saying the deal to create the world’s biggest digital book library would be unfair to authors.

The expansive nature of the settlement, calling for copyright owners to opt out or be automatically included, “would simply go too far,” said U.S. Circuit Judge Denny Chin in Manhattan, who was a district-court judge when the case first came before him. He suggested the settlement would have a better chance at approval were it revised to cover only those who opt into the agreement.

As written now, the settlement “would grant Google significant rights to exploit entire books, without permission of copyright owners,” Chin wrote yesterday. It “would give Google a significant advantage over competitors, rewarding it for engaging in wholesale copying of copyrighted works without permission, while releasing claims well beyond those presented in the case.”

Google, based in Mountain View, California, was sued in 2005 by authors and publishers who said the company was infringing their copyrights on a massive scale by digitizing books. The agreement includes a Book Rights Registry to compensate copyright holders.

Amazon.com Inc. (AMZN), Microsoft Corp. (MSFT) and Yahoo! Inc., along with the German and French governments, said the agreement would give Google unfair control over digitized works and expand its power in the search engine market. Some author groups who weren’t part of the settlement said they would lose control of their copyrights.

Copyright Protection
The agreement focuses on out-of-print books still protected by U.S. copyright law. Google struck agreements with publishers to allow limited access to books that are still commercially available, and the site has links to let consumers buy the books from various sources, including Amazon.com and Barnes & Noble.

Google said it was considering its options and was disappointed by the decision.

“Like many others, we believe this agreement has the potential to open up access to millions of books that are currently hard to find in the U.S. today,” Hilary Ware, Google’s managing counsel, said in an e-mailed statement. “Regardless of the outcome, we’ll continue to work to make more of the world’s books discoverable online through Google Books and Google eBooks.”

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