Lycos Search Patents - Google Litigation
Through its merger with Innovate/Protect, Inc. in July 2012, Vringo acquired ownership of patents that had been purchased from Lycos, Inc. and were asserted in a patent infringement lawsuit against AOL Inc., Google, IAC/InterActiveCorp-owned IAC Search & Media, Gannett Co Inc. and Target Corp. The lawsuit went to trial on October 16, 2012, in U.S. District Court in the Eastern District of Virginia, Norfolk Division before U.S. District Judge Raymond A. Jackson.[24][25]
Following a three week jury trial, on November 6, 2012, a jury ruled in favor of Vringo's wholly owned subsidiary, I/P Engine, and against the defendants with respect to defendants' infringement of the asserted claims of the patents.[26] After finding that the asserted claims of the patents-in-suit were both valid, and infringed by Defendants, the jury found that reasonable royalty damages should be based on a "running royalty", and that the running royalty rate should be 3.5%.[27] I/P Engine presented evidence at trial that the appropriate way to determine the incremental royalty base attributable to Google's infringement was to calculate 20.9% of Google's U.S. AdWords revenue, then apply a 3.5% running royalty rate to that base. The U.S. District Court entered a judgment against the defendants in November 2012.[28]
In May 2013, the defendants argued that I/P Engine was not entitled to any post-judgment royalties because they had ceased infringement by changing the AdWords system. In January 2014, the U.S. District Court found that Google's purported design-around known as "new AdWords" was "nothing more than a colorable variation of old AdWords."[29] Later in January 2014, the U.S. District Court found that the "Defendants' misconduct continues presently and Defendants have taken no remedial action. In fact, they have designed a system that clearly replicates the infringing elements of old AdWords," and for those reasons, the court enhanced the royalty rate "by just over 40% to 6.5%."[30]
Vringo has drawn criticism over some of its litigation tactics. A Google spokesperson said on January 22, 2014, after losing the trial and post-trial motion practice, that the AdWords case "further highlights the mischief trolls can make with the patent system".[31]
Separate from the civil litigation, Google sought to invalidate I/P Engine's two asserted patents through a total of four re-examination requests at the U.S. Patent and Trademark Office. I/P Engine prevailed in defending the validity of the patents in every instance, and received a certificate from the USPTO confirming that all of the claims of the patents challenged by Google remained valid and unchanged.[32]
On August 15, 2014 the United States Court of Appeals for the Federal Circuit, in a 2-1 split decision, reversed the U.S. District Court decision concerning the patent infringement lawsuit filed against Google et al. The presiding Circuit Judges concluded that, notwithstanding U.S. District Court judge and jury having affirmed the validity of I/P Engine's patents, and the USPTO having likewise affirmed the validity of the patents, the patents were "Obvious" and therefore invalid. In dissenting, Circuit Judge Raymond Chen highlighted the majority opinion's failure "to accord sufficient deference to the jury's findings of fact," and explained that the majority's conclusion "squarely conflicts with the jury's express finding" that the prior art lacked specific elements claimed by the patents in suit.[33] Intellectual Asset Magazine called the decision "the most troubling patent case of 2014," and said the appeals court's decision "should be of huge concern to all patent owners in the U.S."[34] I/P Engine hired David Boies to file a petition at the Supreme Court of the United States seeking a review of the case.[35]
