Court Upholds Ruling for Search Engines in Paid Advertisement Case

By Dyanna Quizon, Esq. on February 17, 2012 | Last updated on March 21, 2019

The Federal Circuit Court of Appeals affirmed a lower court ruling in favor of search engine giants Yahoo, Microsoft, and Google in a patent infringement case over paid search advertisements. The order, which was released on Monday, did not elaborate why the three-judge panel upheld the lower court's ruling, however.

The patent infringement suit began in 2007 when Ohio-based company Paid Search Engine Tools sued Yahoo! over its alleged infringement of its "paid search engine bid management" patent. The patent 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 company later added Microsoft and Google to its list of alleged infringers in 2008, and the cases were consolidated in 2009.

The patent reportedly dealt with a method for optimizing keyword bids, but products such as Microsoft's adCenter and Google's AdWords began to cut into the company's profits when they began to offer the services directly to its clients, according to Paid Search attorney J. Robert Chambers.

Ruling in favor of the three search engine companies, a lower court judge in the Eastern District of Texas held that the patent was not valid based on prior art, and the Federal Circuit agreed without elaboration.

"The Federal Circuit's decision is another reminder that patents can indeed be invalidated in the Eastern District of Texas," Weil Gotshal & Manges partner Edward Reines, who represented Yahoo, told The Recorder.

Just in case you haven't heard - the Eastern District of Texas has been one of the most popular federal district courts for filing patent lawsuits and reputedly plaintiff-friendly.

Despite the daunting odds, it looks like Google, Microsoft and Yahoo! can claim a victory in Texas.

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