Google must pay 1.35% of AdSense revenue to some tiny company

Google could end up paying out 1.35 percent of the money it makes off AdWords in the US after losing a patent suit. On Tuesday, Virginia judge Raymond Jackson set an ongoing royalty rate that Google owes a patent and ringtone company called Vringo in addition to the millions in damages it was ordered to pay last year. The case could theoretically net Vringo hundreds of millions of dollars a year, all because of two patents from the early days of search engines.

Vringo is a tiny company that purchased some patents from Lycos, an old search engine, in 2011 and then used those patents to sue Google. In December 2012, Vringo won $30 million in a jury trial, but that was far less than the hundreds of millions it was seeking. Today, Vringo got the payout it was looking for: a 1.36 percent running royalty on US-based revenue from AdWords, Google’s flagship program. US District Judge Raymond Jackson had already ruled last week (PDF) that the AdWords program, which was tweaked by Google after the Vringo verdict, wasn’t “colorably different” from the old infringing program. He gave Google and Vringo one last session to hammer out a royalty rate, and when they couldn’t, he went ahead and set it (PDF)—at almost exactly the rate Vringo was seeking.