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

Vringo Inc. jumped the most in 14 months after it won a patent ruling entitling it to additional royalties from Google Inc. 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 later, he said.

The dispute is over filtering technology to determine placement of advertisements on search results. Google, based in Mountain View, California, said it modified AdWords after the company and some of its customers lost a $30.5 million verdict to Vringo Nov. 6, 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 68 cents, or 22 percent, to $3.81 in New York trading of 16 million shares, 13 times the three-month daily average. It was the New York-based company’s biggest one-day jump since the day before the jury verdict, 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 to the U.S. Court of Appeals for the Federal Circuit in Washington, which specializes in patent law.

“Today’s decision further highlights the mischief trolls can make with the patent system,” said Matt Kallman, a spokesman for Google, using a derogatory term for companies whose main business is to license patents. “We believe strongly in our pending appeal before the Federal Circuit, and we anticipate seeking review of today’s decision as well.”

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).

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