tim's journal

The Overture-Google patent lawsuit

Patently Obvious reported this morning on Google amending its SEC filing to discuss the Overture patent.

Overture Services (now owned by Yahoo) has sued the Company, claiming that the Google AdWords program infringes certain claims of an Overture Services patent. It also claims that the patent relates to an Overture Services own bid-for-ad placement business model and its pay-for-performance technologies. The Company is currently litigating this case. If Overture Services wins, it may significantly limit the Company’s ability to use the AdWords program, and the Company also may be required to pay damages. The Company has asserted defenses of non-infringement, invalidity of the patent in question and unenforceability of the patent. The Company plans to continue to rigorously defend this lawsuit. Management currently believes that the ultimate liability, if any, with respect to this action will not materially affect the financial position, results of operations, or liquidity of the Company, however the ultimate outcome of any litigation is uncertain. Were an unfavorable outcome to occur, the impact could be material to the Company.

The Overture patent, entitled "System and method for influencing a position on a search result list generated by a computer network search engine," has the following abstract:

A system and method for enabling information providers using a computer network such as the Internet to influence a position for a search listing within a search result list generated by an Internet search engine. The system and method of the present invention provides a database having accounts for the network information providers. Each account contains contact and billing information for a network information provider. In addition, each account contains at least one search listing having at least three components: a description, a search term comprising one or more keywords, and a bid amount. The network information provider may add, delete, or modify a search listing after logging into his or her account via an authentication process. The network information provider influences a position for a search listing in the provider ' s account by first selecting a search term relevant to the content of the web site or other information source to be listed. The network information provider enters the search term and the description into a search listing. The network information provider influences the position for a search listing through a continuous online competitive bidding process. The bidding process occurs when the network information provider enters a new bid amount, which is preferably a money amount, for a search listing. The system and method of the present invention then compares this bid amount with all other bid amounts for the same search term, and generates a rank value for all search listings having that search term. The rank value generated by the bidding process determines where the network information providers listing will appear on the search results list page that is generated in response to a query of the search term by a searcher located at a client computer on the computer network. A higher bid by a network information provider will result in a higher rank value and a more advantageous placement