HALIFAX -- The Nova Scotia government has reached a settlement in a copyright and moral rights case involving the Bluenose II with the family of the famous schooner's original designer.

The dispute arose in 2012 after the Roue family launched a lawsuit against the provincial government alleging that it infringed on their copyright and moral rights by using William J. Roue's drawings in the Bluenose II restoration.

Under the terms of the agreement announced Friday, the government would pay the Roue family $300,000, including legal fees, and neither the province nor the family would acknowledge or admit liability.

The family would also release the province from all claims relating to the Bluenose II restoration or future activities relating to the schooner.

Tony Ince, the minister of communities, culture and heritage, said the Liberals wanted to reach a settlement as soon as possible after inheriting the case from the province's previous NDP government in October.

"We agreed it would be better to work with the Roue family rather than pursue an expensive resolution in the courts, where the legal fees have grown well beyond what Nova Scotians consider reasonable," Ince said in an interview Friday.

"I'm pleased that we have reached a settlement and I'm happy we can put this behind us so that we can look at this vessel moving forward in the future as being a proud ambassador for all Nova Scotians."

The province said about $1 million has been spent on legal costs since the case was launched.

The government said it will take steps with the family to have the legal proceedings dismissed by the province's Supreme Court.

The Roue family's lawyer, Bob Belliveau, had no comment on Friday.

The restoration has taken two years longer than expected and is over budget. That prompted Premier Stephen McNeil to ask the province's auditor general in January to investigate it.

The original budget for the project was $12.5 million. An estimate in January had it pegged at $16.7 million, but the government has said labour costs will push that amount higher.

The Bluenose II, launched in 1963, is a replica of the original Bluenose, the 1921 Grand Banks fishing schooner that won worldwide acclaim as a racing schooner for its graceful lines and speed. The Bluenose is commemorated on the Canadian dime.

The Bluenose was sold in 1942 to a West Indies trading company, its masts were cut down and it was used as a tramp freighter until it hit a reef and was wrecked off Haiti in 1946.

Now serving as Nova Scotia's 43-metre sailing ambassador, the Bluenose II was supposed to return to regular sailing in the summer of 2012. The government said Friday it expects that to happen this summer.