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.”