AOL has reached a settlement with Vringo, the mobile app company that sued for patent infringement last fall.
Google is still Vringo’s primary target here, but the move could prove auspicious for Vringo. The amount wasn’t disclosed, but investors reacted by driving up Vringo’s stock price 20% in a few hours. Mark Cuban’s the big winner–he became Vringo’s largest shareholder in April, as we previously reported.
Vringo, which is best known for its video ringtones, has only recently come into possession of the potentially lucrative intellectual property. The patents, which cover “relevance filtering technology” used to rank search-engine results, were developed by Ken Lang and Donald Kosak in the late 1990s, acquired by Lycos, and purchased last year by I/P Engine. Innovate/Protect, as it company was also known, merged with Vringo in late July.
Nearly a year ago, Innovate/Protect sued Google as well as its customers and partners AOL, Gannett, IAC, and Target. The suit contends that Google uses Lang and Kosak’s invention to deliver the appropriate ads alongside search results, which is the main driver of Google’s nearly $38 billion in annual revenue. Innovate/Protect also singled out AOL, charging that its Advertising.com, much like Google, relied on the patented technology. AOL still remains a defendant, however, because it, like the other companies, uses Google.
In litigation over intellectual property, a settlement hardly comes as a surprise. Patent suits, on the whole, are as predictable as romantic comedies despite the irresistible pull of the “will they or won’t they” tension. Just as star-crossed lovers eventually wind up together, the vast majority of parties settle and avoid a trial. Over the past 30 years, according to IPWatchDog, the number of patent trials has remained steady, at about 99 a year. But the number of cases has almost quadrupled, meaning a smaller percentage go to trial.
AOL’s decision to settle follows Vringo’s favorable ruling in the Markman hearing in Norfolk, Virginia, which we covered in June. But AOL is merely a subplot. It’s not the story that matters most.
[Image: Flickr user Dennis Wong]
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