BACKGROUND

When it comes to Google and lawsuits,¹ it seems that Google’s sheer mass and volume make it a supermassive black hole, impermeable to destruction.²  Although, historically, Google battles only with people its own size, recently, a little guy tried to step up to the challenge—but unfortunately, was chewed up and spat back out.

Function Media, L.L.C., a company based in Tyler, Texas, filed suit against Google for providing internet and print advertising products that violated a Function Media patent.  Among the many of Function Media’s claims, the two of strongest importance were the following: Function Media contended that (1) its particular U.S. Patent No. 7,240,025 B2 (the “’025 Patent”) was valid, and that (2) Google infringed upon Patent ’025.  Patent ’025 involves an internet advertising system and method.  Specifically, it discloses a method that makes internet advertising easier and more controlled than prior methods.  Function Media claimed that Google’s advertising products—AdSense and AdWords—infringed on the ’025 Patent because AdSense and AdWords have strikingly similar methods and qualities in the advertising operations.   Furthermore, ’025 Patent was filed September 30, 2004, but AdSense and AdWords, however, did not take off until 2005.

The battle started in 2007: Function Media filed its suit, and the issue was submitted to a jury.  The jury found that (1) Patent ’025 was invalid because of a prior art, and (2) Google did not infringe the ’025 Patent.  Google is no stranger to lawsuits; this jury decision comes as no surprise considering the svelt skill and persuasion a Google-hired attorney likely has.  Thereafter, Function Media appealed and filed a motion for judgment as a matter of law pertaining to the both the validity of the patent and the question of infringement.  Google also filed a motion for judgment as a matter of law claiming the patent was invalid.  After working its way through the courts for over four years, the decision finally came to a close on September 9, 2011 with the decision of U.S. Magistrate Judge Charles Everingham IV of the United States District Court for the Eastern District of Texas. 

’025 PATENT

The ’025 Patent releases methods that give a seller individual control of advertisements on internet media venues that are not owned or controlled by the seller itself.  When a seller wishes to advertise on a particular location, the seller must comply with that media venue’s specific rules and regulations.  The patent provides the seller self-serve control in a form that automatically changes the advertisement to meet the venue’s presentation qualifications for all media types.  These requirements vary from business-to-business and from venue-to-venue, but the requirements often include rules regarding the design, style, and editorial characteristics.  Each venue generally likes to have a certain consistent look, feel, and style.  For example, an ad on the side of The Wall Street Journal will typically need to be more subdued, concrete, and professional than an ad on, say, the side of TMZ.com.  Patent ’025 provides a method that automatically changes and updates the advertisements to meet the venue’s standards; these adjustments are accomplished through an advertisement modification engine process.³  The patent allows sellers advertise and present their products in a wide variety of media outlets without the hassle or worry of venue-specific compliance.  The invention also provides for automatic pricing and purchasing of advertisements.

In patent law, prior art is considered all information previously made available to the public; if the subject matter of the patent is something that would have been obvious when the invention was made (prior art), then the invention may not be patented.⁴  Further, claim construction in patent law is the extent to which the patentee may exclude others from producing and using the invention.⁵  Claim terms must be construed in the “ordinary and customary meaning… that the term would have to a person of ordinary skill in the art” when the invention is created.⁶  The ’025 Patent describes the prior art as cumbersome, inefficient, time-consuming, and costly because advertisers have to otherwise sift through guidelines, negotiate a contract, and individually assure that each advertisement conforms to the venue’s specific requirements.⁷  Google, however, claimed that this particular patent was invalid because it was anticipated by prior art and rendered obvious by prior art.⁸

ADSENSE AND ADWORDS—are definitely not internet advertising products that automatically update ads…?

AdWords, Google’s main source of revenue, is a multi-billion dollar operation that Google created as an advertising product.⁹  AdWords offers sellers various different advertising options with varying styles.  These options are automatically updated and changed according the Interactive Advertising Bureau’s standards.¹⁰  AdSense is another multi-billion dollar Google advertising program that allows users to automatically display and individually-tailor advertisements to its target audience in varying media outlets and forms, such as text, video, images.¹¹  Advertising reveneue is generated either on a per-click or on a per-impression basis, and pricing and purchasing may be automatic.¹²  Yes, these descriptions strangely do have many similarities to Function Media’s product.   

Function Media claimed that Google’s AdWords and AdSense products blatantly infringe upon ’025 Patent in many aspects.  Specifically, Function Media claims that the distribution filter that automatically applies or compares the “internet media venue distribution factors to the information input by the seller or the advertisement” is a direct infringement on the patent.¹³  Furthermore, Function Media claimed that AdSense and AdWords infringed upon Patent ’025’s “computer program design filter” that adjusts the style to reflect the look and feel of the standards required.¹⁴

THE OUTCOME

Judge Everingham ultimately granted Function Media’s judgment as a matter of law finding the ’025 Patent valid—no, this was not really a win for Function Media.  Function Media then tried to get a new trial for its claim that Google’s AdSense and AdWords infringed on the ’025 Patent. Judge Everingham, however, denied the motion for a new trial and affirmed the jury’s decision that Google did not infringe upon the patent.

Judge Everingham granted Function Media’s motion for judgment as a matter of law regarding the patent’s validity on the grounds that Google failed to produce sufficient evidence to prove the patent was invalid.¹⁵  Judge Everingham cited a recent Supreme Court decision that reaffirmed that the party asserting a defense of a patent’s invalidity has the burden to prove the claim of invalidity by clear and convincing evidence.¹⁶  Judge Everingham explained that, since this was such a complex issue, Google needed to supply elaborate expert testimony regarding whether the prior art made the “computer program design filter” limitation an obvious or anticipated prior art.¹⁷  Google supplied just one expert witness to convince the judge that Function Media’s patent was invalid, but the expert witness did not even discuss the contention about the “computer design filter” feature Function Media claimed made AdSense and AdWords so similar to ’025 Patent.¹⁸  Judge Everingham’s decision in this case did at least help define what will and will not constitute clear and convincing evidence in a patent validity issue.  Especially regarding advertising on the internet, it seems that a party arguing in the 5th Circuit must provide more than one witness, or at least must provide one witness that is able to sufficiently explain the issue in a semi-elementary way. 

Regarding the infringement issue, Judge Everingham decided that Function Media’s arguments were “unconvincing”—that was it; he gave no further explanation.  It seems like he should have provided just a little more substance to his decision; after all, billions of dollars were on the line here. Further, he determined that a verdict of validity and a verdict of non-infringement would not create an inconsistency, and therefore, a new trial was not needed.  Finding the patent valid yet not infringed upon, however, seems like a clear contradiction.  If Function Media’s patent is valid, and both companies are using basically the same product—a form of internet advertising specifically designed to automatically update advertisements according to required regulations—then it seems like this is a direct patent infringement, and therefore, a contradiction.

In sum, Judge Everingham decided that Function Media’s patent is valid, but Google did not infringe upon the patent.  In the end, because Function Media cannot get a new trial, it is likely that AdSense and AdWords will swallow up the service provided by the ’025 Patent.  The fact that Judge Everingham let both sides “win,” and the fact that he failed to explain why Function Media’s arguments were unconvincing to him, slightly indicates that he really supported Function Media but just was not willing to make a giant Google-sized decision against the technology giant.  It almost seems like Google’s sheer volume as an unstoppable mass helped it win this one—no one is willing to question an internet giant such as Google.