Overture Sues Google

Bringing months of building tensions among paid listings search engines
to a head, market leader , has filed suit against
upstart rival Google, charging patent infringement.

Pasadena, Calif.-based Overture, which filed its suit against Google
in the U.S. Federal District Court in Los Angeles, charges that the
smaller firm violates U.S. Patent No. 6,269,361, “System and method for influencing a position on a search result list generated by a computer network search engine.”

The patent, held by
Overture, protects bid-for-placement products as well as Overture’s
DirecTraffic Center account management system and tools.

In a press release, Overture said that since its inception, it has
devoted “thousands of combined hours of research and development and
tens of millions of dollars” to develop its systems, and that it
“intends to enforce its intellectual property rights against those who
use its patented inventions without authorization.”

A Google representative said the suit is not a surprise — considering
Overture is engaged in another lawsuit concerning this patent with a smaller competitor, Findwhat.com .

“We have analyzed the patent and determined that we do not infringe any
valid claim that it contains,” said Google corporate spokesperson Cindy
McCaffrey.

The charges stem from Google’s recent entry into the paid listings
search engine space, dominated by market leader Overture and longtime
rival LookSmart .

Mountain View, Calif.-based Google long has been selling keyword-based
paid listings, which it places alongside its unpaid,
editorially-generated search results. But only recently has the firm
started syndicating those ads, dubbed AdWords, to other sites and
charging cost-per-click fees — similarly to Overture and LookSmart.

But Overture spokesman Al Duncan waved away the issue of his firm’s
growing rivalry with Google.

“The reason we filed this lawsuit isn’t related to competition,” Duncan
said. “We filed this to protect our intellectual property rights. We
put years of research and millions of dollars into our systems and we
didn’t take this step lightly.”

Google, which first entered the market when it signed former Overture
client EarthLink to a syndication deal, also offers
account management tools similar to those offered by and endorsed by
Overture.

The following months have seen mounting competition among the paid
listings search engines. Last month, ostensibly in a bid to fend off the
challenge from the space’s newest player, LookSmart announced plans to
acquire WiseNut, a smaller search engine that uses technology similar to
Google. The firm also signed Yahoo!’s Australian
portal to a syndication deal.

At the same time, Overture has been stepping up its own efforts in
international markets, having recently opened a German-language search
engine and signed new clients, such as Deutsche Telekom . The company also recently inked an agreement with Microsoft’s
MSN portal, with which it had long worked in an
experimental capacity.

The suit also comes as Overture is contending with the potential loss of
two major clients: Sunnyvale, Calif.-based Yahoo!, which in the past has
said it is considering developing a paid listings product of its own,
and media giant AOL Time Warner . The firm is in talks
with AOL to extend its contract beyond this month; its work with Yahoo!
is up for renewal in June.

But whether the Overture patent means any bidding element in a paid
listings system must be removed will remain to be seen.

SearchEngineWatch.com Editor
and Internet consultant Danny Sullivan said Overture may have a tough
job proving its point, especially since Google will argue that its
system is not the simplistic bidding model described in the Overture
patent.

“If worse came to worse, and Overture did win, this would mean that
Google and others might not be allowed to have a bid-for-placement
model, but it wouldn’t prevent them from ranking paid listings in other
ways,” said Sullivan. “They could, for example, allow people to pay flat
cost-per-click fees to rank for particular terms, then show ads randomly
or allow those paying higher amounts to have guaranteed placement for
set, contracted periods of time.”

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