Feeds

Judge: Google owes patent troll a 1.36% cut of AdWords' BEELLIONS

Squeaky bum time for web giant

The essential guide to IT transformation

Patent-holding company Vringo has won a legal victory against Google that could net it hundreds of millions of dollars per year in ongoing royalties from the Chocolate Factory's AdWords online advertising system.

According to court documents [PDF] obtained by The Register, Judge Raymond Jackson of the US District Court of the Eastern District of Virginia on Tuesday ordered Google to pay Vringo a royalty rate of 6.5 per cent on a royalty base of 20.9 per cent of AdWords revenues.

In other words, unless the ruling is overturned on appeal, Google could end up owing Vringo 1.36 per cent of what it earns from AdWords in the US, payable on a quarterly basis.

Google and its co-defendants AOL, Gannett, IAC Search & Media, and Target have been battling it out with Vringo since September 2011, when Vringo filed suit alleging that AdWords infringed on two patents owned by its subsidiary I/P Engine.

The patents in question were originally filed by now-defunct search engine Lycos and they relate to how results from search engines can be ordered and ranked.

In November 2012, a jury upheld Vringo's claims on both patents and awarded it cash damages totaling $30.5m, with the bulk of that amount – $15.8m – coming from Google.

The jury also found that Vringo deserved to be paid a "running royalty" for the patents (as opposed to a lump sum), but the actual amount of that royalty had yet to be determined.

Judge Jackson ordered the companies to get a room and hash out a fair rate together, but when they couldn't reach a consensus, he set the rate himself in his Tuesday order.

If the ruling is upheld on appeal, Google will be forced to cough up a payment to Vringo every quarter until either the patents expire on April 4, 2016 or it manages to come up with a new version of AdWords that gets around Vringo's patent claims.

During the trial, Google had argued that it had already reengineered AdWords so that it no longer infringed. But Judge Jackson ruled earlier this month that those modifications hadn't actually changed the system enough and that the new version of AdWords "was nothing more than a colorable variation of the infringing product."

It's hard to guess a dollar amount for the payments Google will have to make under the judgment, but it's safe to say they'll be large. Google doesn't disclose exactly how much it earns from AdWords, but more than 90 per cent of its massive revenues come from advertising, and AdWords doubtless represents a big chunk of that.

In a canned statement, Vringo CEO Andrew Perlman said the company was pleased with the court's ruling and said Google had engaged in "continuing and willful unlicensed use" of Vringo's intellectual property.

Vringo's shareholders were pleased, too. The firm's stock spiked more than 20 per cent on the news, to land at $4.79 per share by the closing bell.

Google, however, plans to contest the ruling. The company's patent counsel Jennifer Polse told El Reg via email: "We believe strongly in our pending appeal in this matter, and we anticipate seeking Federal Circuit review of today's decision as well." ®

Gartner critical capabilities for enterprise endpoint backup

More from The Register

next story
6 Obvious Reasons Why Facebook Will Ban This Article (Thank God)
Clampdown on clickbait ... and El Reg is OK with this
Mozilla's 'Tiles' ads debut in new Firefox nightlies
You can try turning them off and on again
No, thank you. I will not code for the Caliphate
Some assignments, even the Bongster decline must
Banking apps: Handy, can grab all your money... and RIDDLED with coding flaws
Yep, that one place you'd hoped you wouldn't find 'em
TROLL SLAYER Google grabs $1.3 MEEELLION in patent counter-suit
Chocolate Factory hits back at firm for suing customers
Primetime precrime? Minority Report TV series 'being developed'
I have to know. I have to find out what happened to my life
Ex-IBM CEO John Akers dies at 79
An era disrupted by the advent of the PC
prev story

Whitepapers

Top 10 endpoint backup mistakes
Avoid the ten endpoint backup mistakes to ensure that your critical corporate data is protected and end user productivity is improved.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Backing up distributed data
Eliminating the redundant use of bandwidth and storage capacity and application consolidation in the modern data center.
The essential guide to IT transformation
ServiceNow discusses three IT transformations that can help CIOs automate IT services to transform IT and the enterprise
Next gen security for virtualised datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.