Takes on Rival's Search Patent

January 24, 2002   |  Comments

Pay-per-click company heads to federal court to challenge Overture's patent on search engine methods after negotiations over royalties break down.

By Erin Joyce

Pay-for-performance search engine is firing back at its rival Overture Services, charging that a search engine patent it received was obtained illegally.

The action is the latest salvo in the companies' dispute over a patent that essentially puts in the position of having to pay Overture in order to continue running its business. charges that Overture (formerly known as misled the patent office and did not file its patent paperwork within the proper time frame.

As a result, it is seeking a declaration in US District Court that Overture's patent is invalid and unenforceable.

The New York-based makes money from an automated bidding system it provides that dictates where Web merchants' listings are placed on its search engine. The pay-per-click business model is the same as its competitor, Overture Services.

In July of 2001, the Pasedena, Calif.-based Overture received a patent for its business method called "System and Method for Implementing a Position on a Search Result List Generated by a Computer Network Search Engine."

It then informed FindWhat that it was infringing on the patent. In order to avoid a lawsuit from Overture, entered into negotiations on licensing terms.

"In December 2001, Overture offered a license for the patent on terms that believes are economically and structurally oppressive," said in a statement.

In the federal court filing,, alleges the following:

"(1) that (patent No. 6,269,361) is invalid because it describes and claims a system that was in use by, and publicly described in numerous publications, more than a year prior to the time GoTo filed the patent application which resulted in the '361 patent; patent law requires that an application for a patent be filed less than a year after any public use or disclosure of the invention;

(2) that GoTo misrepresented to the patent office the nature and extent of its prior and public uses of the claimed subject matter in order to secure the '361 patent;

(3) that statements made to the patent office, which were material to the patent office's decision to grant the patent, were clearly false and misleading."

A spokesman for Overture said it had only seen the charges via's press release and that it was still reviewing the challenges in the action.

"We're very confident that we have two very strong patents and will vigorously defend them," said Jim Olson of Overture.

The other patent that Overture received relates to advertiser account management tools that are part of the company's performance-based search engine technology which is under dispute by

Phillip Thune, the chief operating officer and CFO for, said the company is not challenging the structure of the patent, just the way in which it was achieved.

"It should not have been issued, primarily because (Overture) did not file in the appropriate time frame," he said.

When asked if was trying to patent a business method similar to the one Overture received, Thune would only say: "We have a couple of patents pending. They do relate to our business."

In a statement, Craig Pisaris-Henderson,'s president and chief executive officer, said the company respects the valid intellectual property rights of others.

" would have preferred to find a mutually agreeable business solution to this matter, but Overture's overreaching demands concerning the `361 patent forced us to seek to vindicate our rights in court."

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