Google's Book Search project will remain on hold after it emerged that the US Department of Justice (DoJ) still has concerns that it may breach anti-trust laws.
The search giant announced its intention to digitise thousands of books in December 2004, and a year later faced class-action lawsuits from the Authors Guild and the Association of American Publishers (AAP), both of which claimed that the firm did not adequately recognise the rights of copyright holders.
Google formed a $125m (£76m) deal with the book publishers last year that included the founding of a Books Rights Registry to distribute revenue to authors and publishers.
However, while the deal settled the concerns of the Authors Guild and the AAP, it established Google as the main competitor in the book digitisation market, which set off an anti-trust investigation by the DoJ.
The DoJ filed a list of objections (PDF) to the Book Search product in September last year, particularly over competition issues and the fact that the deal would allow Google to exploit orphan works, i.e. books out of print but still protected by copyright.
Google attempted to satisfy the DoJ by making a number of changes to the settlement, which the DoJ has now acknowledged in a filing (PDF) with the US Southern District Court of New York as "substantial".
For example, Google has agreed to convey in specific terms how it intends to use the 'amended settlement agreement' works it digitises in the future. Google also said that to protect owners of unclaimed works it would use 25 per cent of any unclaimed funds after five years to locate the rights holders.
However, the DoJ said in the filing that Google's amendments to the deal were not enough, although it continued to commend the value to the public of digitised books.
"Substantial issues remain, although the US believes the parties have approached this effort in good faith," the filing said.
"As a consequence, the amended settlement agreement purports to grant legal rights that are difficult to square with the core principle of the Copyright Act that copyright owners generally control whether and how to exploit their works during the term of copyright.
"Those rights, in turn, confer significant and possibly anti-competitive advantages on a single entity - Google. There is no serious contention that Google's competitors are likely to obtain comparable rights independently."
The DoJ has asked for the settlement discussions between the parties to continue.
Those opposing Google's Book Search have commentated on the DoJ filing, believing it to be an early indicator that the project will fail.
"It seems that the saga of the Google Books settlement has been dragging on for years. We may now be approaching the dénouement," said David Wood, a legal expert for the Initiative for a Competitive Online Marketplace.
"The seal of the DoJ bears a picture of a bald eagle. Google may be feeling today that a picture of a cross and a clove of garlic might be more appropriate. "
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