Oct. 7 (Bloomberg) -- Google Inc., the Web-search engine scanning millions of books to create a digital library, and a group representing authors and publishers have until Nov. 9 to present an amended settlement of a lawsuit, a judge said.

U.S. District Judge Denny Chin in New York was initially planning on deciding today whether he should give final approval to the $125 million settlement reached between Google and the groups. After receiving more than 400 filings, including one from the U.S. Justice Department objecting to the terms, the two sides agreed to make changes. Lawyers today gave Chin an update on their talks.

Lawyer Michael Boni, representing the authors, and Google lawyer Daralyn Durie told Chin today that they aim to present a new settlement by early November. Chin set a Nov. 9 deadline. The lawyers also said they hoped to win final approval of the accord by late December or early January, a schedule the judge endorsed. The two sides said they’ve resolved many issues.

“The parties’ expectation is we will present a settlement agreement,” Durie told Chin.

Google was sued in 2005 by authors and publishers who said the company was infringing their copyrights on a massive scale by digitizing books without their permission. The Mountain View, California-based company said a settlement struck last year will “bring back to life” millions of books sitting unread on library shelves or out of print.

‘Most-Favored Nation’

Under a key aspect of the agreement, Google would make digital copies of books that are no longer commercially available yet are still covered by copyright. The out-of-print books would be available for preview and purchase, unless the author told Google not to offer them.

One possible change is the elimination of a provision that gives Google “most-favored nation status,” which means publishers pledge not to strike more favorable deals with Google rivals. The Justice Department said that provision discourages potential competitors.

Under the agreement, Google, the publishers and authors groups would set up a Book Rights Registry to compensate copyright holders whose works were scanned. It also would seek to identify the rights holders of so-called “orphan works” whose owners aren’t currently known.

Too Much Control

The Justice Department said Google would have too much control over the use of the orphan works, and said Google and the publishers could address concerns by limiting future rights to the works and appointing a “guardian” for the them.

At today’s hearing, Justice Department lawyer William Cavanaugh said the U.S. government hasn’t yet reviewed the new settlement.

The Open Book Alliance, a coalition that includes Amazon.com Inc., the world’s largest online retailer, Microsoft Corp. and Yahoo! Inc., is among the groups who said the agreement would give Google too much control over orphan works.

The group, whose members also include the National Writers Union, the Science Fiction and Fantasy Writers of America and the New York Library Association, today said that changes that will be needed “must be fundamental in scope” and could take longer that until November. It also criticized Google and the publisher and authors groups for not publicly saying what changes could be made.

More of the Same

“Instead, they proposed more of the same -- secret, backroom negotiations -- rather than an open, transparent and collaborative process,” the group said in the statement.

Sony Corp., maker of an electronic book reader that rivals Amazon.com’s Kindle device, has argued in favor of the agreement, saying it would foster competition and spur innovation. Tokyo-based Sony gained access to more than 500,000 e-book titles for its readers through an agreement with Google.

The settlement was reached with the Author’s Guild, Pearson Plc’s Penguin and Education units, McGraw-Hill Cos., John Wiley & Sons Inc. and CBS Corp.’s Simon & Schuster subsidiary.

The governments of France and Germany have objected, saying the agreement violates international copyright laws. Lawyers for Editions du Seuil filed a complaint in a court in Paris that the book-scanning program violates French law. The European Union is considering changing EU copyright rules to deal with the issue of digitizing books.

Opponents’ Comments

Chin today endorsed a proposal that would limit the time for opponents of the new pact to file court papers opposing it. He said opponents of the accord should voice comments only about new terms, not provisions that remain the same.

“Otherwise, it will be many, many, many months” before the case is resolved, he said.

Chin, who was nominated yesterday by President Barack Obama for a seat on the U.S. Court of Appeals, said he wanted to create a system by which parties objecting to the settlement may electronically file court papers, rather than hand-delivering them as previously done.

“In this case, of all cases, there should be an electronic way of handling this,” he said to laughter in the packed lower Manhattan courtroom.

The case is Authors Guild v. Google Inc., 05-cv-8136, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: David Glovin in New York federal court at glovin@bloomberg.net, Susan Decker in Washington at decker1@bloomberg.net.

Last Updated: October 7, 2009 17:29 EDT