Google Cries “Vive la différence!” in Patent Case

Consumers aren’t the only ones who depend on online auctions. Google, for example, uses them to determine the positions and prices of its display advertisements. But, in the case of Bid for Position, LLC v. AOL, LLC and Google, Inc., the company faced accusations that its system infringed a patented method.

It’s an ad, ad world

Bid for Position holds a patent for a method of conducting a continuous auction. The method lets a bidder select a priority position in an online auction and then automatically adjusts the bidder’s bid to maintain that priority. AOL uses a rebranded version of AdWords, Google’s Internet advertising system. AdWords runs continuous auctions to determine the placement of ads on Google’s search result pages.

AdWords allows advertisers to select keywords to trigger the display of their ads. When a user enters a keyword in a search, AdWords runs an auction that determines the order in which the ads will appear next to the search results. Ads are displayed according to their Ad Rank, which is based on the advertiser’s bid price and its “quality score.” (Google calculates this using a confidential algorithm.) Advertisers can also use the “Position Preference” feature to ensure that their ads never appear below their lowest preferred position.

Bid for Position brought a patent infringement lawsuit against Google and AOL. The district court found that neither version of AdWords (with or without Position Preference) infringed the patent. Bid for Position appealed.

What’s the difference?

Like the district court, the Federal Circuit considered both versions of AdWords. It found that the version without Position Preference didn’t infringe the patented method because that method doesn’t simply select the highest ranking position of priority that’s available for the offered bid, as AdWords without Position Preference does. With the patented method, the bidder must select a particular position; the bid isn’t for the best available position.

AdWords with Position Preference does permit a bidder to select a particular position of priority, but the patented method bases priority solely on the bid value. AdWords’ rankings incorporate both the bid value and the quality score, so a bidder that places the highest bid but has a low quality score may not snag the desired position.

Failed bid

In the end, the court found that the patented method is “substantially different” from either version of AdWords. Through its use of the quality score, Google exercises significant control over an auction’s outcome, and the court deemed that a fundamental difference — and one that precluded patent infringement.

About the patent law firm:

Klemchuk LLP is an Intellectual Property (IP), Technology, Internet, and Business law firm.  The firm offers comprehensive legal services including litigation and enforcement of all forms of IP as well as registration and licensing of patents, trademarks, trade dress, and copyrights.  The firm also provides a wide range of technology, Internet, e-commerce, and business services including business planning, formation, and financing, mergers and acquisitions, business litigation, data privacy, and domain name dispute resolution. 

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