Court Orders Google To Pay Out AdWords Royalties


Google could end up paying out 1.36 percent of its AdWords revenue to Vringo – which owns some Lycos patents

A court in Virginia has ordered Google to pay royalties to software company Vringo following a long-running dispute over patent infringements used in its AdWords service.

US District Judge Raymond A. Jackson ruled that I/P Engine, a patent licensing subsidiary of Vringo, should be paid an ongoing royalty rate of 6.5 percent on a part of AdWords revenue in the US, although the actual rate paid by Google will be much less.

Google had already paid Vringo $30 million following a December 2012 ruling, but the mobile development company continued the court battle in an attempt to win more money. Google, which has already appealed the court’s decisions in the US Court of Appeals for the Federal Circuit, is planning to appeal the royalty award as well. “We believe strongly in our pending appeal in this matter, and we anticipate seeking Federal Circuit review of today’s decision as well,” Google’s patent counsel Jennifer Polse said in a statement.

google-london-officeLong-running case

Vringo bought patents from the vintage search engine Lycos, which use relevance filtering technology to place advertisements on a page of search results. In September 2011 the I/P Engine subsidiary sued several companies including Google for filtering search results in this way.

Google had argued that it had redesigned AdWords to remove the supposedly infringing technologies before the ruling was made, but Judge Jackson ruled that the modified system was “nothing more than a colourable variation of the system adjudged to infringe.”

In November 2012, a jury found that Google and the other defendants had infringed the two patents, and awarded I/P Engine $30.5 million in damages, and a running royalty rate of 3.5 percent instead of a lump sum. But in a further order this month, the Court ordered that I/P Engine recover an additional sum of $17.32 million from the defendants for, ‘supplemental damages and prejudgment interest’.

Following an appeal in which it asked for an increase in the royalty rate awarded by the jury, I/P Engine was awarded the royalty rate of 6.5 percent, although as the base of these royalties will be the part of AdWords revenue that can be attributed to the infringing features, the effective rate of royalty on AdWords revenue is therefore likely to be around 1.36 percent. The whole ruling only applies to US AdWords revenues.

The ruling is the latest in a series of patent-related announcements for the search engine giant. Earlier this week, Google announced it had signed a global patent cross-licensing agreement with South Korean smartphone manufacturer Samsung covering patents currently owned by both companies, as well as any filed in the next ten years.

The new partners said the deal “would lead to deeper collaboration on research and development of current and future projects”, however specific details on what major technologies the agreement covers, as well as the financial terms of the deal, were not disclosed.

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Author: Mike Moore
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