Google's latest effort to settle the copyright lawsuit brought against it by The Authors Guild and several publishers in 2005 suffered a setback on Thursday when the U.S. Department of Justice said that copyright and antitrust issues arising from the revised settlement proposal haven't been adequately addressed.

The lawsuit charged that Google's effort to scan and digitize books violates copyright law. Google and the plaintiffs have been trying to reach an agreement that allows Google to make scanned books available in a limited form online and to sell electronic access to digital books with the consent and participation of copyright owners.

The DoJ filed a statement of interest with U.S. District Court for the Southern District of New York stating that despite good faith negotiations on the part of the parties involved, "the amended settlement agreement suffers from the same core problem as the original agreement: It is an attempt to use the class action mechanism to implement forward-looking business arrangements that go far beyond the dispute before the court in this litigation."
A hearing on the proposed amended settlement is scheduled for February 18 and the judge is likely to take the DoJ's concerns seriously. The original settlement, presented in October 2008, was shot down after widespread criticism.

Google in a statement said that the DoJ's filing "recognizes the progress made with the revised settlement, and it once again reinforces the value the agreement can provide in unlocking access to millions of books in the U.S."

The company said that it is looking forward to Judge Chin's review of the DoJ filing and that the settlement, if approved will expand online access to published works and provide authors and publishers with new ways to distribute their works.