• by Wendy Davis  @wendyndavis, November 2, 2010

A federal judge in San Jose has granted preliminary approval to an agreement calling for Google to pay $8.5 million to settle a class-action lawsuit stemming from the launch of Buzz, the company said on Tuesday.

The agreement, initially filed with U.S. District Court Judge James Ware in September, calls for Google to pay around $6 million to various privacy organizations, and $2,500 to each of seven individual Web users who sued. The attorneys who brought the lawsuit will split up to $2.5 million.

Google said in a statement that it was "satisfied" with the proposed settlement.

When Google initially launched Buzz in February, the company created social networks out of people's Gmail contacts. But in a move that was widely criticized by privacy advocates, Google designed the feature so that it initially revealed information about the names of users' email contacts, if users activated Buzz without changing the defaults. This system meant that a host of information that users thought was confidential -- like names of Gmail users' doctors, lawyers or coworkers -- could inadvertently become public.

Google admitted that its initial launch of Buzz was problematic and revised the service after it was launched. The resolution also requires the company to consider further suggestions for improving Buzz's privacy.

Apart from the lawsuit against Google, the advocacy group Electronic Privacy Information Center also filed a complaint in February about Buzz with the Federal Trade Commission.

Ware is slated to hold a hearing in January to determine whether to grant the settlement final approval.