Google has already had to pay $15.8 million in a lawsuit brought on by a company named Vringo (through a subsidiary called I/P engine) for patent violations. Vringo had acquired two patents from Lycos that are about the ranking and placement of ads in search engines. In 2012, courts ordered Google, Microsoft, AOL and others to pay a total of $30 million to the company in the case related to these violations.
Vringo is now pushing for ongoing royalties related to these patents as well. As the suit sits now, the royalties could be up to 6.5% of 20.9% of AdWords revenue from 2012 to 2016 when the patents expire. Given how massive the revenue from AdWords is, that will work out to an estimated $800 million to $1 Billion from Google alone, in addition to a lesser amount from the other defendants in the case.
The two patents involved are #6,314,420 and #6,775,664. Both of which are owned by Vringo, a company best known for being a ‘patent troll.’ Essentially they applies for, or buys up, patents in the hopes that another company will use the technology. They can then sue that company, as they are doing here. Vringo does not use the patents for their own business at all.
Google is fighting the judgment regarding the ongoing royalties, and at this point it is not clear what the verdict may be. The courts could throw out the royalties, enforce them as they are now, or change the percentages that Vringo will get.