Yahoo vs. FindWhat: Round 2 in 30 Days

    May 26, 2005

Yahoo’s paid search marketing division (formerly known as Overture) sued the smaller PPC firm FindWhat for patent infringement back in 2002.

The suit is based on Overture’s original patent outlining the bid-for-placement ranking model used by most PPC firms. Two weeks ago a California jury found themselves unable to render a verdict resulting in the declaration of a mistrial. The suit is schedule to return to court on June 24.

The case has raised the anxiety levels of most PPC search-advertising firms. If Yahoo is successful in their case against FindWhat, what happens for the rest of the industry? Over the past year, scores of firms have established themselves in the PPC market; growth that has spawned a burgeoning service and advertising sector. Google settled a similar suit with Yahoo last summer just before launching its IPO in late August. Part of the settlement granted Google a perpetual license to the patent.

FindWhat watcher Jordan Rohan from RBC Capital Markets told investors he expects an out-of-court settlement in the range of $7 to $8 million. A settlement for FindWhat might not settle the waters for other PPC firms Yahoo turns its eye on in the future. FindWhat is one of the larger tier2 PPC players with cash reserves around $50 million and could likely better afford a settlement and licensing fee than other smaller PPC firms.

The next hearing might be scheduled for June 24 but the actual suit might not actually get back to the courts for a while yet. FindWhat maintains the patent is unenforceable due to inequitable conduct on the part of Overture. A rule with US tech patents is that the methods and techniques outlined in a patent must be put into commercial use within 365 days of the patent’s filing. That topic as well as a number of other motions filed by FindWhat need to be moved off the docket first.

Jim Hedger is the SEO Manager of StepForth Search Engine Placement Inc. Based in Victoria, BC, Canada, StepForth is the result of the consolidation of BraveArt Website Management, Promotion Experts, and Phoenix Creative Works, and has provided professional search engine placement and management services since 1997. Tel – 250-385-1190 Toll Free – 877-385-5526 Fax – 250-385-1198