XpresSpa Group Inc (XSPA)

[High_Profits]

Fast forward. Overture, another search engine company that no longer exists (Yahoo bought it) files a patent for a bidding system for ads on a search engine. The patent office says (I’m paraphrasing), “you can file patents on A, B, and C. But not D, E, and F. Because Ken Lang from Lycos filed those patents already.”

http://techcrunch.com/2012/03/31/why-google-might-be-going-to-0/
Why Google Might Be Going to $0

Overture/Yahoo goes on to successfully sue Google based on the patents they did win. [between $260 million and $290 million Google settled right before they went public but long before they achieved the bulk of their revenues.

Lycos goes on to being a barely breathing, comatose patient. Fast forward to 2011. Ken Lang buys his patents back from Lycos for almost nothing. He starts a company: I/P Engine. Two weeks ago he announced he was merging his company with a public company, Vringo (Nasdaq: VRNG). Because it’s Ken, I buy the stock although will buy more after this article is out and readers read this.

The company sues Google for a big percentage of those $67 billion in revenues plus future revenues. The claim: Google has willfully infringed on Vringo – I/P’s patents for sorting ads based on click-throughs. I remember almost 20 years ago when Ken was working on the software. “Useless!” I thought then. Their claim: $67 billion of Google’s revenues come from this patent. All of Google’s revenues going forward come from this patent. And every search engine which uses Google is allegedly infringing on the Vringo patent and is being sued.

Think: Interactive Corp (Nasdaq: IACI) with Ask.com. Think AOL. Think Target which internally uses Google’s technologies. Think Gannett, which uses Google’s technology and is also being sued. Think, eventually, thousands of Google’s customers who use AdSense.

Think: “willfully”. Why should you think that? Two reasons. Overture already sued Google. Google is aware of Yahoo/Overture’s patent history. The patent history officially stated that Ken Lang/Lycos already has patented some of this technology. What does “willfully” mean in legal terms? Triple damages.
[color=red][/color]
Why didn’t Lycos ever sue? After Lycos had its massive stroke and was left to die in a dirty hospital room with some uncaring nurse changing it’s bedpans twice a day, Google was STILL Lycos’s biggest customer. Why sue your biggest customer? Operating companies rarely sue other operating companies. Then there are countersuits, loss of revenues, and all sorts of ugly things. The breathing tube would’ve been pulled out of Lycos and it would’ve been left to die.

Think: NTP suing RIMM on patents. NTP had nothing going on other than the patents. Like Vringo/Innovate. NTP won over $600 million from RIMM once Research in Motion realized this is a serious issue and not one they can just chalk up to a bad nightmare.


(the beginning of the end for RIMM)

Guess who NTP’s lawyer was? Donald Stout. Guess who Vringo’s patent lawyer is? Donald Stout. Why is Donald Stout so good? He was an examiner at the US Patent Office. He knows patents. They announced all of this but nobody reads announcements of a small public company like Vringo. It’s hard enough figuring out how many pixels are on the screen of Apple’s amazng iPad 3.

Well, Google must have a defense? Even though their AdWords results are sorted by click-throughs in the way described by the patent maybe they sorted in a different way (a “work-around” of the patent), and didn’t infringe on the patent

Maybe: But look at Google economist Hal Varian describing their algorithm right here in this video. And compare with the patent claim filed in court by Vringo. You decide. But it looks like the exact same to me.

Maybe: But does Google want to risk losing ten billion dollars plus having all of their customers sued. The district the case is getting tried in rules 70% in favor of the plaintiff in patent cases. Most patent trials get settled on the court steps.