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10/2/2007
05:11 PM
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AOL, Google, Microsoft, Yahoo Sued Over Competitive Bidding Patent

Performance Pricing alleges that Google AdWords, AOL Search Marketplace, Microsoft adCenter, and Yahoo Search Marketing all violate its "competitive bidding" patent.

For the third time in about a month, Google has been sued for patent infringement.

Last week, Performance Pricing filed a lawsuit against AOL, Google, Microsoft, and Yahoo, charging the four companies with infringing upon its patent, "Systems and methods for transacting business over a global communications network such as the Internet."

The suit was filed in the Eastern District of Texas, where a large number of patent cases have been filed in recent years due to the district's perceived friendliness to ostensibly wronged inventors.

According to the Coalition for Patent Fairness, a group that counts Google and Microsoft as members, there were 218 infringement lawsuits filed in Marshall, Texas, from January 2004 through April 2006.

At the end of August, AOL, Amazon, Borders, Google, IAC, and Yahoo were sued in the same district by Texas-based Polaris IP for violating a patented method of automated e-mail routing.

Illinois Computer Research sued Google in Illinois' Northern District Court in mid-September for violating a patented method of navigating through online books.

Performance Pricing alleges that Google AdWords, AOL Search Marketplace, Microsoft adCenter, and Yahoo Search Marketing all violate its patent, which was filed in 1999 and granted in 2005.

The patent describes a system for competitive bidding.

"The present invention comprises a business model used to determine the price of goods and/or services to be provided from a seller or sellers to a buyer or buyers," the patent explains. "Various forms of electronic competition and/or entertainment are used as intermediary activities between said buyers and sellers to ultimately determine a contract price."

The patent claims to cover a wide variety of activities: video games, electronic board games, crossword puzzles or other word games, sports betting, card games, or any other activity or combination of activities.

Presumably, the plaintiff believes the patent covers Internet ad auctions, too.

In a September 4th blog post, Google policy counsel and legislative strategist Johanna Shelton and Michelle Lee, head of patents and patent strategy, urged Congress to pass patent reform legislation.

"Google and other technology companies increasingly face mounting legal costs to defend against frivolous patent claims from parties gaming the system to forestall competition or reap windfall profits," Shelton and Lee said.

Three days later, on Friday, September 7th, the House of Representatives passed the Patent Reform Act of 2007. The Senate is expected to vote on a version of the bill shortly.

If the Patent Reform Act passes the Senate and is signed by the President in its current form, monetary damage awards for patent infringement are likely to decline and venue shopping will be curtailed.

"Certain district courts have become notorious for rarely invalidating a patent, and have tilted the balance too often in favor of plaintiffs," said Shelton and Lee. "We support judicial venue provisions to ensure that patent lawsuits are brought only in district courts with a reasonable connection to the case."

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