Southern District

Apple Inc. (AAPL) executives were prepared to abandon plans to enter the e-book business on the eve of the company’s 2010 debut of the iPad, Penguin Group USA Inc. Chief Executive Officer David Shanks testified in the U.S. government’s civil antitrust trial against Apple.

Shanks, called on the second day of the trial in Manhattan federal court, yesterday described his company’s decision to sign a deal known as an agency agreement for Apple to sell Penguin’s electronic books. He said Penguin signed on after initially resisting Apple’s pricing model.

Pearson Plc’s Penguin unit said it reached a $75 million settlement of antitrust claims by 33 states and consumers over electronic-book pricing.

Penguin, which was sued last year for allegedly participating in a conspiracy with other publishers and Apple Inc. (AAPL) to fix the price of e-books, announced the settlement in a statement today. The company resolved related claims with the U.S. Justice Department in December.

Pearson Plc (PSON)’s Penguin unit must participate in a June trial in which the U.S. alleges an electronic book price-fixing conspiracy with Apple Inc., a judge ordered.

U.S. District Judge Denise Cote in New York yesterday also ordered Penguin to provide its initial witness list by March 1. Penguin has until March 15 to file a motion if it decides not to defend against the lawsuit and to request to hear the testimony of two of its executives at the trial.

Three independent bookstores have filed a class action suit against Amazon and all of the big-six publishers, alleging that the proprietary digital rights management tools Amazon uses on ebooks serve to create a monopoly. The indies say publisher contracts calling for the use of this DRM, which like most forms of DRM prohibits readers from copying ebooks or reading them on non-authorized devices, restrain ebook sales and that Amazon “has unlawfully monopolized or attempted to monopolize the market for ebooks in the United States.”

Many ebook buying consumers in 49 states will soon receive payments as a result of the states’ settlement with publishers HarperCollins, Hachette and Simon & Schuster. The states have provided a few more details about how those payments will work and have changed some things slightly.

In a document filed with the U.S. District Court for the Southern District of New York, the states’ attorneys lay out two modifications to their original settlement:

US book publisher Houghton Mifflin Harcourt (HMH) has moved quickly to secure funding after filing for Chapter 11 bankruptcy early this week. This means that many of its unsecured creditors - including printer RR Donnelley and print manager Williams Lea - will likely be paid some, if not all, of the millions of dollars owed them. In its original bankruptcy filing in New York's Southern District Monday, the Boston publisher of Mark Twain and Curious George listed $2.68bn in assets and $3.53bn in debt. Among its leading unsecured creditors are Chicago-based RR Donnelley and Williams Lea, who are each

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