Agence France-Presse has settled its 2-year-old lawsuit against Google Inc., a move that defuses the French news agency's allegations that inclusion of its content in the Google News site amounts to copyright infringement.

The AFP and Google have signed a licensing agreement that grants Google permission to use AFP news and photos, the AFP said Friday in a news release.

AFP sued Google in March 2005, alleging that Google broke the law by including, without permission, AFP material in Google News, a site where Google aggregates links, text snippets and thumbnail photos of articles from thousands of media outlets.

In its defense, Google argued that the Google News site is protected by the fair use principle, which allows for limited use of copyright material, and that headlines, text snippets and thumbnail images aren't protected by copyright.

In its statement, which is being run verbatim as a news story by some AFP subscribers, AFP said details of the licensing agreement would not be disclosed. The deal will let Google use AFP material "in innovative, new ways," AFP said. Specifically, Google gets permission to use AFP material on Google News, and in other, more extensive ways, the AFP said.

That sounds like a similar agreement to the one Google reached with AFP competitor Associated Press in August of last year. At the time, Google and AP said they had struck a licensing agreement granting Google permission to use the wire service's material in a broader manner than it does in Google News.

In its lawsuit, which was filed both in the U.S. and France, the AFP sought damages of at least US$17.5 million as well as a court-imposed order barring Google from including its material in Google News.

The AFP case had gotten much attention as a potentially solid legal test for Google News, which courts in Belgium have found violates copyrights.

Google didn't immediately respond to a request for comment.

The settlement is the result of "lots of long, good faith negotiations" between the two parties, said Joshua J. Kaufman, the AFP's lead attorney in the U.S. in this case and a partner with the Washington, D.C. law firm Venable LLP.

As of Friday, AFP material is once again allowed in Google News, and AFP expects that its material will be more broadly used by Google shortly, Kaufman said.

Besides its legal implications, the case also drew attention to how technological issues can impact cases involving the Web, as Google and AFP both ran into technical hurdles during the litigation.

Google, for example, had difficulty keeping AFP material from appearing on Google News, despite its pledge otherwise. This difficulty apparently stemmed from the fact that AFP material is syndicated to its subscribers, and as such it appears on many different Web sites, not just one.

Meanwhile, during the case's discovery process, AFP had difficulty collecting evidence to prove its allegations of copyright infringement, mostly because news material on Web pages disappears quickly as sites update.

Google's practice of indexing third-party content without permission is being challenged in other cases in the U.S. and abroad, and involves services like its Google Book Search, Google Image and YouTube.