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Search smackdown ends in hung jury
FindWhat, Overture locked in legal tangle over technology that fuels paid search advertising market.
May 12, 2005: 3:30 PM EDT

NEW YORK (CNN/Money) - FindWhat.com said Thursday that its three-year long patent infringement dispute with Overture Services, Inc. ended in a hung jury, boosting shares as much as 17 percent near midday.

But Yahoo! (down $0.23 to $34.65, Research) unit Overture said the court determined that FindWhat infringed on the patent claims at issue in the trial, and that the portions of the case still in dispute dealt with other matters.

"We are pleased to learn the jury has determined that FindWhat infringed on all of the patent claims that were before the jury and at issue in the trial. It is unfortunate that the jury did not reach conclusion on the remaining issues. We look forward to resolving all remaining issues in the post-trial briefing that has been scheduled by the Court," Yahoo! said in a statement.

The mistrial prolonged a legal dispute over the bid-for-placement technology that has fueled the lucrative paid search advertising market,

Both FindWhat (up $0.34 to $4.54, Research) and Yahoo! subsidiary Overture make money by using a pay-per-click business model that places company listings on their search engines using an automated bidding system.

But Overture was granted U.S. Patent No. 6,269,361 for the bid-for-placement technology that determines how and where results are positioned on a search list, essentially forcing FindWhat to pay Overture licensing fees to continue running its business.

FindWhat charged that Overture's patent was obtained illegally and moved to have it invalidated, saying that patent law requires that an application for a patent be filed less than a year after any public use of disclosure of the invention, according to their court filing.

Overture then sued both FindWhat.com and Google to protect the patent, with the suit against Google settled just before the search giant launched its $270 million initial public offering.

Overture dismissed the suit against Google and granted its larger rival a fully paid perpetual license to the patent.

"We continue to believe that FindWhat.com has never infringed any valid and enforceable claim of the '361 patent," Craig Pisaris-Henderson, FindWhat.com's chairman and chief executive officer, said in a statement.

In a company statement, FindWhat.com also noted that the judge has yet to rule on the patent issue because of inequitable conduct committed by Overture.

A hearing on the inequitable conduct issue and other motions that could impact the ultimate outcome of the case is currently scheduled for June 24, 2005, FindWhat said.

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