February 01, 2013, 9:12 AM — Intellectual property company I/P Engine has sued Microsoft for infringing two search patents it acquired from Lycos.
Microsoft allegedly infringes two patents that cover a relevance filtering technology that is mainly used to place high quality advertisements on the best positions within a search engine, according to the lawsuit filed with the U.S. District Court for the Southern District of New York on Thursday. This advertising placement method has become the dominant technology in the market, and allows search engines to generate substantial revenue, the company said.
Both patented technologies are used within Bing Ads, part of Microsoft's search engine Bing, according to I/P Engine. Therefore, the company is seeking compensation for past and future damages. It did not specify an exact amount, and demanded a jury trial to determine what a reasonable royalty rate would be, the document showed.
A Microsoft spokesman reached on Friday declined to comment on the matter.
I/P Engine is a wholly owned subsidiary of Vringo, a company with a portfolio of over 500 patents and patent applications covering telecommunications infrastructure, Internet search and mobile technologies. Its patents and patent applications have been developed internally, and acquired from third parties, the company states on its website.
Both patents in the current suit were acquired from Lycos, one of the earliest participants in the search engine industry, the filing said. Both technologies were patented by Andrew Lang , a former Lycos CTO who now serves as CTO at Vringo; and Don Kosak , who also has served as a CTO at Lycos.
I/P Engine has previously sued AOL, Google, IAC Search & Media, Gannett Company, and Target over the same patents. Last November, a jury ruled in favor of I/P Engine at the U.S. District Court for the Eastern District of Virginia, Norfolk Division, saying that the defendants infringed the patents.
"The jury found that reasonable royalty damages should be based on a 'running royalty,' and that the running royalty rate should be 3.5 percent," Vringo said in a news release at the time. The jury verdict form showed that it recommended damages of $15.8 million against Google and $7.9 million against AOL.
After this jury verdict, I/P Engine decided to file a motion with the court, asking to adjust the post-judgement royalty rate to 7 percent. Because the defendants' ongoing infringement is undisputedly willful, and the patented technology is acknowledged to be "mission critical" for Google, such an increase is justified, according to I/P Engine's damages expert, Stephen Becker, the release said.