Vringo Wins U.S. Patent Case on Google’s Modified AdWords

Vringo Inc. (VRNG) jumped as much as 22 percent after it won a patent ruling entitling it to additional royalties from Google Inc. (GOOG) over its AdWords product.

A modified version of AdWords is “nothing more than a colorable variation of the infringing system,” U.S. District Judge Raymond Jackson in Norfolk, Virginia, said in an opinion posted on the court’s website today. The royalty rate will be determined after a settlement conference scheduled for later today, he said.

The dispute is over filtering technology to determine placement of advertisements on search results. Google said it modified AdWords after the company and some of its customers lost a $30.5 million verdict to Vringo in November 2012. Google said it didn’t owe any royalties after May 11, 2013, when the changes were implemented.

Vringo has “proven that new AdWords, like old AdWords, infringes its patents by filtering based on the combination of collaborative and content data,” Jackson said in his opinion. The company “is entitled to ongoing royalties as long as defendants continue to use the modified system.”

Vringo rose 70 cents, or 22 percent, to $3.83 before trading was halted. It was the biggest intraday jump since Nov. 5, 2013, according to data compiled by Bloomberg.

AOL, Gannett

Google, AOL Inc., Gannett Co., IAC/InterActiveCorp, and Target Corp. were told earlier this month to pay Vringo $17.3 million in supplemental damages for the period Oct. 1, 2012, to Nov. 20, 2012, not covered by the jury verdict plus pre-judgment interest. The companies have appealed.

The technology originated with Lycos, a pioneer in search engines. Innovate/Protect Inc., now Vringo, bought eight Lycos patents, including the two at issue in the trial, for $3.2 million in June 2011. Vringo sued Google and its customers in September 2011.

The case is I/P Engine Inc. v. AOL Inc., 11cv512, U.S. District Court for the Eastern District of Virginia (Norfolk). The appeal is I/P Engine Inc. v. AOL Inc., 14-1233, U.S. Court of Appeals for the Federal Circuit (Washington).

To contact the reporter on this story: Susan Decker in Washington at sdecker1@bloomberg.net

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net

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