DOJ urges court to reject Google book settlement

In a blow to Google and its plan to digitize millions of out-of-print books, the U.S. Department of Justice has asked a federal judge to reject Google's proposed $125 million settlement with the Authors Guild, "due to concerns of the United States regarding class action, copyright and antitrust law."

While the Justice Dept.'s brief is a setback for Google (GOOG), the feds left the door open to a possible compromise by encouraging additional settlement talks.

"Given the parties' express commitment to ongoing discussions to address concerns already raised and the possibility that such discussions could lead to a settlement agreement that could legally be approved by the Court, the public interest would best be served by direction from the Court encouraging the continuation of those discussions," the feds said in a statement.

"Because a properly structured settlement agreement in this case offers the potential for important societal benefits," the government continued, "the United States does not want the opportunity or momentum to be lost."

Despite its opposition, the Justice Dept. said the settlement "has the potential to breathe life into millions of works that are now effectively off limits to the public."

In a statement issued Friday night, Google, the Authors Guild and the Association of American Publishers, avoided directly addressing the Justice's Dept's position opposing the settlement, and tried to focus on the positive aspects of the federal government's brief.

"The Department of Justice's filing recognizes the value the settlement can provide by unlocking access to millions of books in the U.S.," a Google said in a statement emailed to DailyFinance. "We are considering the points raised by the Department and look forward to addressing them as the court proceedings continue."

Additional critics of Google's proposed book settlement with the Author's Guild include the European Union, as well as rival companies such as Amazon (AMZN), Yahoo (YHOO) and Microsoft (MSFT).

The Justice Dept. filed its brief with U.S. District Court Judge Denny Chin, in the Southern District of New york, who is weighing whether to approve the settlement, and has scheduled a hearing for Oct. 7 to hear arguments on the matter.

Google's proposed settlement with the Authors Guild would create an entity to be called the Books Rights Registry, which would be funded by Google and oversee payments to authors, as well as have the ability to strike deals with Google's competitors.

Opponents of the deal, led by the Open Book Alliance, which includes Amazon, Yahoo, the Internet Archive and Microsoft, charge that the settlement would give Google too much power in the burgeoning market for digital books.

Much to Google's chagrin, the federal government appears to have seen the merit of some of those concerns. The parties now have until Oct. 7 to prepare for a showdown in Judge Chin's courtroom in lower Manhattan.

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