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Google Businesses Patents The Internet

Google and Yahoo Settle Overture Lawsuit 106

Posted by simoniker from the happy-again dept.
An anonymous reader writes "Google and Yahoo have apparently settled their ongoing lawsuit involving patented on-line ad technology owned by Yahoo subsidiary Overture. (U.S. Patent 6,269,361). According to reports, Google will issue 2.7 million common shares to Yahoo in return for a license. Read more about the infringement suit here. This move is expected to lower any potential downsides to Google's upcoming IPO."
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Google and Yahoo Settle Overture Lawsuit More

Google and Yahoo Settle Overture Lawsuit

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  • So thats around $300 million for the license. Ouch.

    How many shares are google issuing? What percantage will end up in the hands of yahoo?

    • Re:Some licence (Score:2, Interesting)

      by vettemph ( 540399 )
      No way, that's $10,000,000 for a license. What makes you think there stock is worth anything NEAR what what it will initially sell for? I said it before and I'll say it again. In a few months, this stock will drop to its fair value of four bucks. I just a f'n search engine, come on people!
      • I said it before and I'll say it again; stock might drop a little, but no way it will go to area you are predicting (and I do short stocks for living). It is just search engine, but it is "the search engine." It has commanding marketshare in that area and great and inovative work force.

        I think it will be good long-term investment as a premier internet blue stock.

        Anyway, time will tell.

        (for anyone interested I developed few web apps in rebol, check them at my site http:www.wsbears.com/charts.html [wsbears.com], suc

    • Re:Some licence (Score:2, Informative)

      by Aerion ( 705544 )
      How many shares are google issuing? What percantage will end up in the hands of yahoo?

      IIRC, Google is issuing about 16 million shares (not including these 2.7) in its IPO, which comprise 7% of all its shares. So percentage-wise, not really all that much.

  • Shares as cash? (Score:5, Interesting)

    by usefool ( 798755 ) on Monday August 09, 2004 @05:56PM (#9924352) Homepage
    Is it a common practice nowadays to use shares (IPO even) for payment?

    My understanding is that if a share is not sold, you don't have a cent yet in your pocket.

    The article estimated that would net Yahoo as much as an additional $149 million at the high end of Google's expected IPO price range. However, could (and would) Yahoo sell all shares at the high end price though?

    • Re:Shares as cash? (Score:5, Informative)

      by Anonymous Coward on Monday August 09, 2004 @06:21PM (#9924574)
      It's very common. For example, in almost any story involving the purchase of a company for $XXX million (particularly ones from the ex-dot-com days) the deal is actually for stock, not cash. It's also common for companies to swap options or warrants as part of some deal.

      Shares have value, even if a company isn't public. It's simply a little easier to place a value on a public company, since you have so many opinions floating around in the market.

  • LOL (Score:5, Funny)

    by nlawalker ( 804108 ) on Monday August 09, 2004 @05:56PM (#9924354)
    Google Exec 1: "Yahoo is suing us for the way we display ads."
    Exec 2: "Yeah, but look, this IPO thing is great! Look, it's so easy. I can just create a couple million shares here and and do whatever I..."
    Exec 1: "Problem solved."
    • Yeah, and the number (2.7m) looks very similar to the number of shares they don't have and are trying to buy back.

      Probably they want to give them those non-existing shares.

      Don't be (d)evil!
  • That's interesting. People are already saying that because of the auction format of the IPO, Google shares will probably not match their auction values any time in the short term. What an evil way to screw over Yahoo, use your own shares which are guarnteed to fall shortly thereafter. ;-)

    • It's still a good deal... (Score:4, Insightful)

      by sunilonline ( 609351 ) on Monday August 09, 2004 @05:59PM (#9924387)
      Even if Google stock falls to $1 a share (very unlikely), Yahoo would still make $2.7 million. It's not like the license costs Yahoo anything; they'll make plenty of money in any case.

      • Re:It's still a good deal... (Score:1, Insightful)

        by Anonymous Coward
        And the catch is... It's now in Yahoo's best interest to not sue Google anymore. If they do, they'll just bring Google's stock price down and therefore reduce their own assets.
        • ---only if they want to sit on their stocks. They could sell them, yes?

  • do only evil (Score:2, Insightful)

    by danmart ( 660791 )
    lets see:
    infringe on gooogles.com trademark
    infringe on froogles.com trademark
    infringe on gmail trademark
    infringe on overture patent
    track all searches via cookies and IP address
    make stored information available to govt agencies

  • Seems like.. (Score:4, Insightful)

    by ciroknight ( 601098 ) on Monday August 09, 2004 @05:57PM (#9924372)
    Google's just trying to get their stock out there and in the news, any way possible. Kind of strange way of doing it since they could have won the lawsuit I'm sure, but still. This is very odd behavior from Google.

    • Re:Seems like.. (Score:5, Insightful)

      by nsample ( 261457 ) <nsample AT stanford DOT edu> on Monday August 09, 2004 @06:03PM (#9924422) Homepage
      They would ahve most likely:

      A) Lost the lawsuit, and/or
      B) muddied the IPO waters by fighting at this time.

      This was a strategic move by Google.

    • Odd behavior? (Score:4, Insightful)

      by FreeLinux ( 555387 ) on Monday August 09, 2004 @06:09PM (#9924472)
      Why is this odd? It is an excellent business strategy.

      First: When you are about to execute an IPO it is usually undesireable to have lawsuits hanging over your business. This is especially true when the suit is over a patent on your primary source of revenue.

      Second: Settling lawsuits is common business practice even with suites that you would likely win. The cost of going to court and defending against the suit, not to mention possible damage to your company's image, is usually higher than the settlement's cost. Therefore, the settlement is viewed as a reduction in operating cost.

      Finally: This particular settlement costs Google $0.00. They are literally manufacturing the "money" for this settlement. They are paying in stock. Stock that does not yet have a market value. And, any perceived loss on the potential sale of the stock is made up for by adding more stock to the IPO. It works GREAT for Google, from a business perspective.
      • By what logic does that cost them nothing? They are giving away a couple percent of the company. Also, the stock does already have a market value, see tradesports.com [tradesports.com] where its value is determined by an active market.

        Just because they are not paying cash does not make it any less real.

      • Re:Odd behavior? (Score:5, Insightful)

        by Technically Inept ( 715181 ) on Monday August 09, 2004 @06:37PM (#9924677) Homepage
        Finally: This particular settlement costs Google $0.00. They are literally manufacturing the "money" for this settlement. They are paying in stock. Stock that does not yet have a market value. And, any perceived loss on the potential sale of the stock is made up for by adding more stock to the IPO. It works GREAT for Google, from a business perspective.

        That's not really the way it works. You can't issue stock for free. Stock is just a percentage of your company. With more outstanding stock, those IPO shares would be worth, say, .00009% of the company instead of .0001% of the company (numbers entirely made up). Therefore, the IPO shares are worth slightly less, and Google makes less money on the IPO. And if the market is working efficiently (and it usually is), the money lost, between Google's cash payday and the value of the unsold privately held shares, will equal more or less what those new shares would have been worth in the IPO.

        That being said, if you think your shares are going to be overvalued at IPO, then this strategy it works great in the long run. It's the only way a company like AOL could buy a company like Time Warner.

      • Re:Odd behavior? (Score:4, Interesting)

        by mrklin ( 608689 ) <ken...lin@@@gmail...com> on Monday August 09, 2004 @07:47PM (#9925193)
        Finally: This particular settlement costs Google $0.00.

        Your opinion is about as valuable as an accountant's opinion on network security implmentation.

        Issues shares cost Google money, which is why Google had to absorb a quarterly charge of $250-$300 million. This will make Google lose money for the quarter - the quarter in which they planned to go public. For your information, in Q3 of 2003, Google only earned $20.4 million.

        Yahoo, however, will increase its stake in Google to 4%. It has already announced that it will likely sell a large percentage; this will make Yahoo's Q3 look great compared to Google's. The sell-off is likely to decrease Google's stock price further, if indeed Google does go public when it had planned. Yahoo will also forever be able to say Google's ad technology is based on theirs.

        Lastly, search engine preference change. For a while, Yahoo! was on top. Altavista (now owned by Yahoo!, who also owns Imktomi) was once on top. Google is now the king. Who is to say in a few years, Toema, meta search engines, or even Yahoo! will not be on top?

        If you think this is an "excellent busines sstaretgy" or Google, think again!

    • Re:Seems like.. (Score:2, Interesting)

      by Anonymous Coward
      Seems to me that Google wants to curb the enthusiasm of unwanted potential investors -- and it's a smart move: if *everyone* is interested, the whole thing can explode at the start and only go downhill from there.

      So instead there are warnings in the prospectus, the unregistered shares buyback offer, the Yahoo dispute, the dislike of Wall Street and the day-trading audience... Keeps the too nervous and too speculation-prone types out of the club. Warren Buffet does the same thing with his $100,000 per share

  • Yahoo already owned some of Google (Score:5, Interesting)

    by Ars-Fartsica ( 166957 ) on Monday August 09, 2004 @05:59PM (#9924380)
    Yahoo was an early funder of Google and alreay had I think 2% of the company. This number may be off but Yahoo did have ownership before this settlement.

    Things get worse and worse everyday for Google, and to think they had months when the hype was absolutely unreal, yet they failed to capitalize. To quote Richard Russell, the guru market timer: "Google may know the web, but they know nothing about markets".

  • 2.7M *more* shares issued? (Score:2, Insightful)

    by Anonymous Coward
    ... And with Google already acting like a penny stock, this is why I have no interest in the IPO.

  • IP lawyers seems to be hard at work lately (Score:5, Insightful)

    by Louis Savain ( 65843 ) on Monday August 09, 2004 @06:01PM (#9924406) Homepage
    I predict that it will come a time soon when nobody will know who owns any particular piece of IP due to complete confusion. This whole IP business is getting ridiculous. IP laws seemed to have been created for lawyers to make a living while contributing nothing to the economy.

    The internet is a system that serves, among other things, as a conduit for exchanging ideas. Someone said that the internet never forgets. It is possible that most the newer patents involving software and the web are invalid due to prior art which can be found by searching the net. Someone else may have thought about it and posted it somewhere.

    Is there a special place on the net where people can go and post ideas so as to make it impossible for the greedy bastards to patent them?
    • Sure there is.

      Right here, we all *promise* we wont exploit them or anything ;)

      Problem with web based ideas, is that they are public, I believe the GPL is the best protection at present, but even that is being exploited by unscrupulous corps.
    • I'm an IP attorney, and let me assure you, it's not the IP attorneys who run around coming up with ideas of who to sue- it's our clients. They find a product or service that they think infringes their patent/trademark/copyright, and then they ask us to go after them.

      IP law is indicitive of the economy as a whole. When the economy is doing well, people/companies have more money for filing patents/trademark/etc. When the economy is slower, people save more money (less filings), and also are more likely to go after people (attempting to extract money from their techonology.)

      If you invented something completely new and revolutionary, such as Bell's telephone, or the Wright brothers' plane, would you want to earn money from it for some time- or let anyone and everyone produce it and make the money (instead of you). Patents provide an incentive to discover and invent new things, and ensure your time, money and efforts don't go to waste.

      The problem we have now is that patent offices worldwide are backed up, and often patent examiners are not qualified. For example, up until about 5 years ago, the USPTO would not accept computer science degrees as a qualification for patent agents/examiners- this was left to people with electrical engineering degrees.

      At our firm, we have noticed that in the past 3-6 months, the USPTO is less friendly in approving patents- even for things that we believe are new & patentable. The European Patent Office has been rejecting things as well, for technologies that we believe are new & unique.

      • If you invented something completely new and revolutionary, such as Bell's telephone, or the Wright brothers' plane, would you want to earn money from it for some time- or let anyone and everyone produce it and make the money (instead of you). Patents provide an incentive to discover and invent new things, and ensure your time, money and efforts don't go to waste.

        It is funny you should say this because some of the most creative geniuses in the history of the world (Isaac Newton, Mozart, Beethoven, Blaise
        • It is funny you should say this because some of the most creative geniuses in the history of the world (Isaac Newton, Mozart, Beethoven, Blaise Pascal, Rene Descartes, etc...) had no patent protection whatsoever. And as far as someone else making money from my ideas is concerned, so what?

          For the record, patents protect inventions (such as the Flowbee [flowbee.com], and not ideas such as gravity (Newton), metaphysics (Descartes). I imagine that since Pascal was producing adding machines, he likely would've liked protection for his invention. The Wright brothers did not get a patent for flying, or the Bernoulli Effect, they got a patent for a machine that performed these functions. As for Mozart & Beethoven, this is not patent law- it's copyright. And yes, those two were quite wealthy back in their time.

          There are people in the third world right now who are laughing at your patent laws. They're selling copies of Windows and MS Office in the streets for pennies on the dollar. Heck, they're laughing at them right here in the US. Music download has become an addictive pasttime for some people.

          This is copyright law again, as the underlying issue is protecting an original work of authorship. I agree with you on this part. The copyright holders in the US are doing a terrible job of adapting to new technologies. As for patents in the Third World, like pharaceuticals, that's messed up as well. Drugs are needed in certain areas, and should be available- but companies still need to make money.

          • Your points are well taken. I was thinking of IP protection laws in general, not just patents. Let me take this opportunity to add Leonardo da Vinci to my list. A lot of experimental physicists in the old days (Faraday, Volta and Lavoisier come to mind) could have patented a bunch of things based on their discoveries. Yet they continued to be highly creative without the artificial "protection" of IP laws.
          • It's funny how you only list actual inventions that were patented, like airplanes, telephones, and flowbies. I, and most everyone else attacking the US patent system, have no objection to patents on inventions. You completely sidestepped how the US has abandoned the Mental Steps Doctrine prohibiting patents based on mental steps - software patents. Patents based on what amounts to a sequence of thoughts. Patents like this Yahoo patent.

            If I have software to carry out this Yahoo patent, and rather than execu

          • For the record, patents protect inventions (such as the Flowbee, and not ideas such as gravity (Newton), metaphysics (Descartes). I imagine that since Pascal was producing adding machines, he likely would've liked protection for his invention. The Wright brothers did not get a patent for flying, or the Bernoulli Effect, they got a patent for a machine that performed these functions. As for Mozart & Beethoven, this is not patent law- it's copyright. And yes, those two were quite wealthy back in their ti

      • Bell's telephone? Bzzzzt. Try Antonio Meucci (Score:4, Interesting)

        by cliveholloway ( 132299 ) on Monday August 09, 2004 @07:49PM (#9925211) Homepage Journal

        "If you invented something completely new and revolutionary, such as Bell's telephone..."

        What a great example from an IP lawyer! The telephone was invented by Antonio Meucci [italianhistorical.org]. He died seven years into a lawsuit with Bell. There's even been a Congress resolution [theage.com.au] admitting he invented it.

        Oh the irony.

        "Patents provide an incentive to discover and invent new things, and ensure your time, money and efforts don't go to waste."

        Try telling that to Meucci.

        cLive ;-)

        • What a great example from an IP lawyer!

          And I presume you know everything about anything in your field as well? People do make minor mistakes sometimes.

          That said, I stand corrected. I guess my knowledge for Jeopardy has been improved. That story is likely not atypical for that era, with all the railroad trusts, etc- money talks. Also, today you have 1 year in the US to file a patent application from the first sale or public disclosure anywhere in the world. Meucci would be out of luck today, as it was a decade before he filed anything.

          Not being an expert in 19th century patent law, I can make a few comments about if this happened today.

          1- The US is a "first to invent" country, which awards patents to the person able to prove they invented it first. The rest of the world is "first to file."

          2- The US now has the Disclosure Document Program [uspto.gov], which will serve as evidence of the date of conception of an invention. You still need to file, and cannot sit on an invention for years. The filing fee is $10.

          3- Provisional patent application, which has less statutory disclosure requirements, has a $85 filing fee. Often used for filing a journal article before publication.

      • At our firm, we have noticed that in the past 3-6 months, the USPTO is less friendly in approving patents- even for things that we believe are new & patentable. The European Patent Office has been rejecting things as well, for technologies that we believe are new & unique.

        Um, I don't mean to seem insolent here, but how often is your firm filing patents for things that you don't believe are new and patentable? And by filing these patents, aren't your clients contributing to the overall problem?

      • Re:IP lawyers seems to be hard at work lately (Score:5, Insightful)

        by jesterzog ( 189797 ) on Monday August 09, 2004 @08:25PM (#9925416) Journal

        If you invented something completely new and revolutionary, such as Bell's telephone, or the Wright brothers' plane, would you want to earn money from it for some time- or let anyone and everyone produce it and make the money (instead of you).

        It's interesting that you should bring this up, because so many inventions are as much a product of their time as of a particular inventor. I'd contend that the aeroplane wasn't a particularly unique invention, although it was probably hard to tell at the time due to communication issues. The telephone and the electric light bulb most likely weren't, either. If they hadn't been invented then someone else likely would have invented them within a short span of time.

        The Wright Brothers most likely invented their own powered flying device without help, and clearly got the most recognition for it. But there were several other people elsewhere doing exactly the same thing independently. eg. Richard Pearse [wikipedia.org] is one example who arguably flew before the Wright Brothers. There are several others in different parts of the world.

        The point isn't so much that someone did it first, but that several people were able to independently do it at the same time. Why should only one inventor or otherwise capable person be able to profit just because they were the first to independently extend what was already known?

        Unfortunately I think that's what's happening quite frequently in today's world. It's particularly an issue now that improved communication can mean several people independently invent almost the same thing weeks apart, simply as an extention of existing knowledge and a reaction to something they needed or wanted more than any revolutionary business goal. Yet if the first person happened to file a patent on it, it's too bad for everyone else. They're not allowed to earn without paying up.

      • If you invented something completely new and revolutionary, such as Bell's telephone, or the Wright brothers' plane, would you want to earn money from it for some time- or let anyone and everyone produce it and make the money (instead of you). Patents provide an incentive to discover and invent new things, and ensure your time, money and efforts don't go to waste.

        (for software patents) i have read on several places that no statistical evidence has ever been found supporting the "patents stim
        • did i miss something ?

          No you didn't. Patents are all about greed and selfishness. It is a way for an entity to gain a monopoly on a market and keep everybody else out while it is making a killing. Patents are not conducive to good human relations. It is just another facet of the dog-eat-dog nature of our economic and social system. It's a form of our collective madness. It can only lead to chaos and destruction. It's rather sad because it does not have tobe that way.
      • > Patents provide an incentive to discover > and invent new things, and ensure your > time, money and efforts don't go to > waste. this is absolute nonsense, but I appreciate the fact that if you didn't believe this, then you probably wouldn't be an IP attourney. Self-justification leads to dellusion. It happens to us all, we spend years studying a topic in school and working hard at our careers. We all slip into things without thinking about the big picture. Keep drinking the koolaid :-)
    • Someone said that the internet never forgets.

      Hey!!! I said that! I'm getting my lawyer....

  • The underlying motive... (Score:4, Funny)

    by Ingolfke ( 515826 ) on Monday August 09, 2004 @06:16PM (#9924538) Journal
    Although this looks like a straightforward patent suit, there are more dubious motives at play here. Specifically Google was in the middle of developing a new search technology that would finally bring search technology into 93% of all North American households (world wide estimates vary based on the region). Yahoo! used the suit to dilute Google's stock price and drain their cash reserves while Yahoo! develops their own alternative solution in a partnership with MSN.

    I was skeptical at first until I was given a demo of the new technology by one of my old graduate school friends who is working for Google. The tool's interface is similar to Google's current standard search interface (although a verbal UI is under development). The killer feature, the feature that would have made Google search ubiquotous, is the ability to search for physical objects. I simply typed in "my keys" and I was given a reply "Your right pocket", along with a short description of the object, the # of key, use of the keys, and their GPS location. Amazing!

    My friend, who for obvious reasons must go unnamed, told me the lawsuit will force google to shut down the project because the only way they could fund it was through context based advertisements (based on the infringing patent). He did however point me to this backdoor [google.com]. I can't promise it will stay up very long... especially with the Slashdot crowd using and abusing it... so check it out while you can.
  • Hey, that patent was issued on the same day as mine (which happens to be hanging on the wall in front of me. It's off by 6.
  • Like most people ready for the Google IPO, I am expecting the IPO to come in at the low end of the range. By Google giving common shares as payment, Google is not going to be hurt by the deal only the investors. It is almost like $200-$300M of investors money will be used to pay for this lawsuit right away. Even more reasons for us day traders [groupshares.com] to short the hell out of GOOG.

    Aj
  • All of these PTO conflicts show there's a lot wrong with the system. But all of the settlements leave the people with no legal precedent. It makes it harder for corporations, too, but they've got a lot less risk than people who could lose their own money, and perhaps even go to jail. The PTO crisis should at least take into account the most common lawsuits, and their resolutions, even if only to perform an analysis of the system that produces them, and not to decide the merit of any specific complaint.

    So a

  • Maybe a bigger deal? (Score:1, Informative)

    by Anonymous Coward
    Potentially more important than being discussed? See this piece at The Register [theregister.co.uk] for a different take.
  • Hello this is my first ever posting to Slashdot so be gentle please. Do you think that in the next few years we could see a Google/Yahoo merger/takeover? If so what would they be called? My money is on GooHoo!. Do you GooHoo? The domain already registered though, I have checked.
  • what is the nature of the patent? did overture really come up with something interesting that google used (if so, how did google get their hands on the technology), or was overture simply first in line at the patent office for the whopping idea of "matching ads to search queries"?

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