Google's plan to put millions of existing books online has suffered a setback as a U.S. federal judge concludes that it would give Google  the ability to "exploit" books without the permission of copyright owners.

After lawsuits from publishers and the Authors Guild in 2005, a settlement whereby Google agreed to pay $125 million to establish a registry to allow authors and publishers to register their works and get paid when their titles are viewed online and also allowed copyright owners to prevent Google from scanning their works and to collect money for each work that was previously scanned by Google.was reached in 2008. Now this has settlement has been rejected.

"While the digitization of books and the creation of a universal digital library would benefit many," Judge Chin wrote, Google's current pact would "simply go too far."

The deal would

"give Google a significant advantage over competitors, rewarding it for engaging in wholesale copying of copyrighted works without permission,"

and he also noted antitrust concerns related to the settlement, including that

"would arguably give Google control over the search market"

for books.

Judge's Chin's decision isn't however the end of the story as it allows for re-negotiation of a deal that would better protect copyright owners. He even suggests an acceptable mechanism: rather than let copyright owners of books "opt out" of the settlement, copyright owners should be given the choice to "opt in."

Hillary Ware, a managing counsel for Google, said the decision was "clearly disappointing" and the company would consider its options.

"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," she said.

Publishers also hope that a settlement can still be achieved. "Publishers are prepared to modify the settlement agreement to gain approval," said John Sargent, chief executive of Macmillan, in a statement issued by the Association of American Publishers on behalf of the publisher plaintiffs.

"We plan to work together with Google, the Authors Guild and others to overcome the objections raised by the Court and promote the fundamental principle behind our lawsuit, that copyrighted content cannot be used without the permission of the owner, or outside the law."

Gary Reback, a lawyer and co-founder of the Open Book Alliance, a group that opposed the settlement and includes Google competitors such as Microsoft Corp., Amazon.com Inc. and Yahoo Inc., said the rejection didn't resolve his concerns that Google uses scanned books to enhance its search engine by displaying snippets of the book's text, among other things.

Judge Chin's ruling changes little for Google users. About two million books that are in the public domain can currently be viewed free on the Google Books site and are also are available for purchase through Google eBooks.  Google Books users can also view long previews of another two million books that are in copyright and in print, thanks to agreements between Google and tens of thousands of publishers that were separate from the legal settlement. Millions more books that are in copyright but out of print are currently available in Google Books in a shorter "snippet view." Had the settlement been approved, users would have been able to see longer previews and potentially buy those books.

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