A New York-based “patent troll” called Vringo, through its subsidiary I/P engine, successfully sued Google, Microsoft, AOL and others using two patents related to search advertising. The plaintiff won approximately $30 million at trial in 2012.
Google was asked to pay $15.8 million of that amount. Yet plaintiffs were also seeking ongoing royalties, which the court has now awarded. Google was contesting the royalty and the company will likely now appeal the calculation, which is potentially massive.
The math is confusing. However, as Ars Technia reports, the royalty amounts to just over 1.35 percent of US AdWords revenue, between 2012 to 2016 when the patents in question (6,314,420 and 6,775,664) will expire. In the court’s order (embedded below) the royalty figure is presented as 6.5 percent. But it’s 6.5 percent of 20.9 percent “royalty base” apparently.
Doing some simple math, Google could be compelled to pay between $800 million and $1 billion for the four-year period based on the approved royalty formula. Vringo’s attorneys originally wanted nearly $700 million in damages from the defendants collectively. They will obtain more than that from Google alone if the royalty determination stands.
The “420″ and “664″ patents involved the ranking and placement of ads in search results. They were filed in 1996 and owned for a considerable length of time by Lycos, which later sold them to Vringo.