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Google, Microsoft Sued Over Keyword Auction Patent

Paid Search Engine Tools says Google's AdWords and Microsoft's AdCenter advertising services violate its Paid Search Engine Bid Management patent.
Google and Microsoft face yet another patent lawsuit in the reputedly plaintiff-friendly Eastern District of Texas.

On Tuesday, Paid Search Engine Tools LLC, a corporation based in Liberty Township, Ohio, filed a patent-infringement claim against Google and Microsoft in the Eastern District of Texas. The company claims that Google's AdWords and Microsoft's AdCenter advertising services violate its "Paid Search Engine Bid Management" patent.

The patent, U.S. Patent No. 7,043,450, was filed in 2002 and granted in 2006. It describes a method "for overcoming deficiencies and inefficiencies in the current paid search engine keyword bidding market, by providing keyword bidders with information they need to better optimize their use of paid search engines. The system accumulates bid amounts for a plurality of target keywords at one or more paid Internet search engines, and presents the bid amounts to a user, enabling the user to evaluate and optimize bids on those keywords."

In other words, Paid Search Engine Tools has laid claim to online keyword auctions.

Last year, 13 patent-infringement claims were filed against Google, eight of them in the Eastern District of Texas. Seventeen patent suits were brought against Microsoft in the Eastern District of Texas in 2007, to say nothing of the wide array of cases brought against the company elsewhere.

Such statistics demonstrate why the tech industry has been vocal in its support of patent reform. Google and Microsoft are among the more than 150 corporate signatories of a letter sent to congressional leaders in January by the Coalition for Patent Fairness in support of S.1145, the Patent Reform Act of 2007.

Dennis Crouch, associate professor of law at the University of Missouri School of Law and the author of the law blog Patently-O, noted in a Nov. 2 blog post that although it remains the most popular district court for filing patent lawsuits, the "magnetism of the Eastern District of Texas may be beginning to wane." He also offered evidence to the contrary: More than 15% of new patent lawsuits filed between Aug. 1 and Nov. 1, 2007, were filed in the Eastern District of Texas.

Michael C. Smith, a partner in the law firm of Siebman, Reynolds, Burg, Phillips & Smith, maintains a blog about his patent litigation practice in the Eastern District of Texas. In a blog post last July, he disputed the notion the "defendants just can't win there.

"As anyone that actually works in the patent docket can tell you around here, that just isn't true," he said. "Defendants have won half of the patent cases tried in the Eastern District this year, and the plaintiff's win rate in 2006 and 2007 combined is still only 66%."

Attorneys for Google and Microsoft no doubt would prefer more favorable odds.