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Two Notable Patent Cases Add Fodder to Reform Talk

By William Peacock, Esq. on January 30, 2014 | Last updated on March 21, 2019

Once upon a time, there was an Internet powerhouse known as Lycos. The search engine-turned portal competed with Yahoo in the pre-Google days.

The site, with its familiar black dog logo, remains online, but it is now, for all practical purposes, an online ghost town. And patent relics salvaged from that ghost town, sold to a patent assertion entity, just came back to haunt the company that pretty much wiped Lycos off the map.

Sweet, sweet revenge, in the form of a patent troll.

Meanwhile, Red Pine took an existing idea (releasing movies online via on-demand services before the theatrical release) and slapped the word "cellular" on it. They're suing, amongst others, Amazon and Magnolia (a Mark Cuban company).

Vringo: Troll Armed With Lycos' Patents

According to Ars Technica, though the publicly-traded Vringo has a video ringtone business (video ringtones? why?), its financial statements indicate pretty clearly that its primary business is patent assertion.

The patents at issue, 6,314,420 and 6,775,664, were originally owned by Lycos, and supposedly apply to the method used by Google to present the most relevant AdWords advertisements. To us, the "collaborative/adaptive search engine" and "information filter system" sound like vague concepts that could apply to any modern search engine.

Verdict + Royalties = Lucrative Business

Nonetheless, a jury was convinced and awarded Viringo $30 million in damages. According to Ars Technica, the company had more than $10 million in legal expenses last year alone, so while that figure might sound like a victory, it was a minor one at best.

Google tweaked its AdWords program post-verdict, but last week, U.S. District Court Judge Raymond Jackson ruled that the new version wasn't "colorably different" from the old program. On Tuesday, the judge awarded Viringo a 1.36 percent running royalty on U.S.-based revenue from AdWords.

How much is that worth? AdWords is Google's core business. Yes, Google does email, search, hardware, and all sorts of other odd projects, but it makes nearly all of its money from one thing: ads.

Stupid Movie Patent

Mark Cuban is pissed. One of his companies, Magnolia, pioneered the pre-theater online VOD business, built it into an industry, and is now being sued for violating a patent for distributing a movie via cellular data before it is shown in theaters. Home broadband? Not a problem. Straight to video "B movies?" Also not a problem.

The case in sum: an overly-specific patent on an obvious extension of an existing business model, issued years after the idea was pioneered by someone else, to a company that does nothing but assert its rights under this single patent.

Federal Circuit Bound, Troll Reform Fodder

Google's lead patent attorney, Jennifer Polse, told Ars that the company had already appealed the Viringo jury verdict and would appeal the royalty ruling as well. And Mark Cuban, well, you know where he stands on patent reform.

So will these cases add fodder to the patent reform fight?

We'd think so. In one case, we have vague patents, issued to a nearly-defunct website, sold to a non-practicing entity, which are asserted against a company that, everyone agrees, independently developed its allegedly-infringing technology. And the patent holder is set to get hundreds of millions of dollars as a result.

And the other? It's a joke of a patent on an obvious extension of an existing business model.

The sad thing is, the Viringo verdict will likely lead to more trolling. After all, if you could buy patents from the corpse of a website, and turn them into hundreds of millions of dollars, you'd do exactly that, wouldn't you? We'll wait and see on the Red Pine patent, though we'd venture a guess that they'll be far less successful.

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