• by Wendy Davis  @wendyndavis, October 4, 2012

Google and the Association of American Publishers have resolved a longstanding legal battle about the search giant's book digitization project, they announced on Thursday.

The settlement allows publishers to decide whether to exclude their books from Google's Library Project. When publishers allow their books to remain in Google's search index, the company will be able to display up to 20% of the work and sell digital versions through Google Play. Publishers who don't remove their books will also be able to receive a digital copy for their use.

Other settlement terms, including any financial component, are confidential.

The publishers said in a statement that the deal "acknowledges the rights and interests of copyright-holders" and that it "will help further book discoverability online." The group added that the settlement "will build upon longstanding individual retail relationships that already exist between Google and most US publishers with our shared goals of furthering eBook awareness and sales. "

While the deal resolves the publishers' battle with Google, the company is still facing a lawsuit by the Authors Guild. U.S. Circuit Court Judge Denny Chin recently said that case could proceed as a class-action, but Google appealed the ruling to the 2nd Circuit Court of Appeals. That case is now on hold while the appellate court reviews whether class-action status is appropriate.

The legal proceedings date to 2005, when the Authors Guild and Association of American Publishers sued Google for infringing copyright by scanning books from public libraries. In addition to digitizing the books, Google made them searchable and displayed snippets through its search engine.

Google has always argued that it has a fair use right to scan in books and display snippets, but the issue hasn't yet been litigated.

In 2008, Google reached a $125 million settlement with authors and publishers, but the deal was scuttled by Chin due to antitrust concerns. That rejected agreement called for Google to fund a new book rights registry, similar to the music industry's ASCAP and BMI, and would have allowed Google to sell downloads of books at prices that it sets with the registry.

That deal was controversial because it would have allowed Google to digitize orphan works -- books under copyright, but whose owner isn't known -- without fear of copyright infringement lawsuits. Currently, no one can publish orphan works without risking liability -- which can run as high as $150,000 per infringement. For that reason, Amazon and other companies said that the deal would have disadvantaged them.