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November 15, 2009

Google Files Revised Settlement For Digital Book Sales

by Sam Savage

Google, along with U.S. authors and publishers, submitted a revised settlement to a federal judge in New York on Friday in hopes of resolving the antitrust and copyright concerns of the U.S. Justice Department and some overseas governments.

The 370-page modified agreement comes just two months after the Justice Department objected to Google's original settlement with authors and publishers, saying it would harm the market for electronic books.

If the amended settlement is approved, it would clear the way for a vast online library with millions of books that could be sold online.

Many have praised Google's plan to create the massive library, but others have been critical based on antitrust, copyright and privacy issues.

Google is hoping to keep its plan on track with the updated settlement, which includes a series of new provisions. Among these are added flexibility to offer discounts on e-books and pledges to make it easier to resell access to a digital index of books.

Additionally, copyright holders also would have to provide explicit permission to sell digital copies of their books if another version is being sold anywhere else.

The settlement is only the latest development in a class-action lawsuit filed against Google four years ago by groups representing U.S. authors and publishers. That suit alleged that Google's plan to make digital copies of all the books in the world violated their intellectual rights.

Google negotiated a $125 million settlement over a year ago, but was met with critics who protested to U.S. District Judge Denny Chin, who must approve the deal before it takes effect.

Among other objections, opponents said the plan would give Google the power to illegally set the prices of electronic books - a format expected to become increasingly popular.

The Justice Department shared those concerns, and advised Chin that the original settlement would likely violate laws enacted to preserve competition and protect copyright holders, even if they can't be found.

The concessions didn't satisfy one of the most vociferous opponents, the Open Book Alliance, a group that includes Microsoft Corp., Yahoo Inc. and Amazon.com Inc.

"Our initial review of the new proposal tells us that Google and its partners are performing a sleight of hand," Peter Brantley, the Open Book Alliance's co-chairman, told the Associated Press.

"Fundamentally, this settlement remains a set-piece designed to serve the private commercial interests of Google and its partners."

In a conference call on Friday, company representatives for Google, along with the authors and publishers, were optimistic that the court would approve the revised settlement.

However, they acknowledged they did not address all the concerns raised by the Justice Department.

The financial terms of the new settlement remain the same as the previous agreement, including a provision that 63 percent of all sales proceeds go to participating authors and publishers.

Under a timeline set forth in the revised agreement, the Justice Department would have until Feb. 4 to file its opinion about the latest revisions, with a final hearing suggested to take place February 18.

Officials in France and Germany had also objected to Google's original settlement, calling it too broad and saying it could infringe on copyrights.

The new settlement would apply only to books registered with the U.S. copyright office or published in Australia, Canada or the United Kingdom.

Much of the unease about the agreement has centered around whether it would give Google a monopoly on "orphan works" - out-of-print books still protected under copyright but whose authors' whereabouts are unknown.

If the writers or their heirs don't stake a claim, the original settlement calls for any revenue generated from the sale of these works to go into a fund that would ultimately be shared among authors and publishers who work with Google.

However, the latest settlement designates an independent party to oversee the financial interests of the orphan books' copyright owners. Proceeds from the sales of those books would be held for a decade, compared with just five years under the terms of the original agreement. Beyond that, the money would be donated to charity.