Vringo, a company known for the video ringtones it makes for mobile phones, has been a somewhat surprising, yet significant player in the patent battle over search engine software. Most of the patent litigation has been undertaken by I/P Engine, a subsidiary of Vringo, that has often been accused of being a patent troll (acquiring patents primarily for litigious, instead of development, purposes). In late 2012, Vringo sold over 9.6 million shares of stock to raise over $31 million to buy 500 patents, including the two at issue from Nokia. Although the patents were only initially worth $20 million, Vringo’s continued patent litigation strategy has increased the potential for their long-term value to increase. After acquiring patent #6,314,420 (Collaborative/Adaptive Search Engine) and patent #6,775,664 (“Information Filter System and Method for Integrated Content-Based and Collaborative/Adaptive Feedback Queries”), Vringo has successfully brought suit against Google, AOL, Gannett, IAC, and Target. The patents at issue permit the search software to match advertisements to queries run by the search engine’s users. These patents are essential to the ranking and placement of ads in search results and thus, they are integral for search engines’ marketing revenue.
Vringo’s previous suits, while successful, resulted in judgments that, although substantial, were only a fraction of the hundreds of millions that it sought in damages. In addition to these one-time compensatory payments, Vringo also received a judgment for a continuing collection of royalties from Google, a decision that Google is still fighting. Due to the success of the substantive claims, Vringo has brought suit against Microsoft using identical patents and theories. I/P Engine seeks royalties from Microsoft not only for use of the patents by its search engine Bing but also for continuing to use of the patented information after having been warned that their use of the technology was in violation of an already held patent. The second part of I/P Engine’s claim forms the basis for its “willful infringement” claim against Microsoft, which will permit I/P Engine to seek punitive damages in an attempt to avoid the disappointing results of its previous patent litigation.
The possibility that I/P Engine could potentially recover more than the $15 million it received from Google or that it could collect continuing royalties from search engines has again raised fears that patent trolls could stall software development. This has prompted billionaire Mark Cuban to buy a controlling stake in the company for the purpose of hedging against the patent exposure that other companies in which he has investments face. Although patent trolls have been blamed for costing the technology development industry millions and constantly pose a threat to technology giants, if investors such as Cuban are willing to acquire controlling interests in publically-held patent trolls, there could be an end in sight for Vringo and other trolls’ litigious ways.
* Cory Howard is a second year law student at Wake Forest University School of Law. He holds a Bachelor of Arts in International Affairs. Upon graduation, Mr. Howard plans to pursue a career in corporate law.