Google’s AdWords Defeats Competitor’s Patent Infringement Claim

Google’s AdWords Defeats Competitor’s Patent Infringement Claim

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Paid Search Engine Tools, LLC v. Google Canada Corporation, Google LLC and Alphabet Inc., 2021 FC 1435

In this proceeding, the Federal Court of Canada (the “FC”) dismissed a case against one of the largest search engine marketing vendors in the world, keeping them from having to pay Paid Search Engine Tools, LLC (“PSET”) for their alleged patent infringement.

In rejecting PSET’s contention that Google Canada Corporation and Google LLC and Alphabet Inc. (collectively, “Google”) enjoyed commercial success as a result of PSET’s patent, PSET’s asserted patent claims were held invalid on several grounds.

Background

Paid search is a marketing tactic where search engines allow advertisers to show advertisements on their search engine results pages (“SERPs”). These advertisements work on a pay-per-click (“PPC”) basis, meaning that businesses only pay when a user clicks the advertisement. This advertising has become increasingly popular over the past couple decades, changing the way we find information, shop for products and services, and connect with others. These tactics have been utilized by several search engines in Canada, attracting large numbers of consumers and producing millions of dollars in marketing capital annually.

PSET is the owner of Canadian Patent No. 2,415,167 (the “‘167 Patent”), which outlines a method for users to optimize their use of paid search engines by accumulating target keywords and directing web users to the site of the highest bidder. Around the same time as PSET filed the ‘167 Patent in 2001, Google launched a product called Google Ads (formerly, AdWords).

Rivalry between the service providers began in 2018, when PSET sued Google for infringing the ‘167 Patent. PSET took the position that they should be credited with the method for optimizing keywords bids, and Google’s launch of Google Ads directly cut into their revenues. PSET pursued similar patent cases against Microsoft Corporation and Yahoo! Inc.’s paid search platforms in US courts. Google denied any infringement and argued that the ‘167 Patent was invalid on various grounds, including anticipation, obviousness, insufficiency, and inutility.

Analysis

Sufficiency

After construing the claims, the trial judge considered the following validity issues raised by Google – sufficiency, anticipation, and obviousness. In Canada, every patent application must include a “specification” that correctly and fully describes the invention and operation or use of the invention as contemplated by the inventor. A hypothetical person of skill in the art (the “POSITA”) must be able to produce the invention using only the instructions contained in the disclosure of the patent. The trial judge was not convinced that the ‘167 Patent satisfied this requirement, as several claims did not provide sufficient direction as to the function or operation of the pay-per-click advertising process [203]. Particularly, the ‘167 Patent was silent on the application of the advertising process and use of statistical data within the computer system or processor.

Anticipation & Obviousness

Canadian patent law provides that an invention is not patentable if the same thing has been done before or described before, publicly. The invention, if not new, is said to have been anticipated by the prior art reference. Similarly, if the POSITA would find an invention obvious in light of existing relevant information, then the invention cannot be patented. The trial judge identified several online bid management tools that offered functions similar to the ‘167 Patent at the time that it was filed, anticipating essential elements of the claims [239-245]. Based on a review of the prior art, the trial judge was also satisfied that at the time of filing the ‘167 Patent was obvious, as the bid and search management business was experiencing rapid development and a number of other companies were offering the same products.

Patent Infringement

In patent infringement litigation the party seeking to invalidate the patent has the burden of demonstrating infringement. PSET’s position was that the ‘167 Patent covers core elements of the Google Ads system [265], but the trial judge found that the concepts claimed by PSET were simply not supported by the claims and embodiments [300]. PSET did not meet its evidentiary burden to establish infringement and the action was dismissed with costs.

Commentary

Though filed in the early 2000s, PSET has spent several years engaging in costly and time-consuming litigation to assert its patent rights. Intellectual property are assets that can increase business value and market potential by offering enforcement strategies that either force competitors to cease operations or compensate for losses caused by infringement. As demonstrated by this decision, patent rights are only as valuable as they are drafted. The strongest of patent protection will shield inventors by actively discouraging competitors from entering the market with similar products. Had PSET drafted the ‘167 Patent more effectively, not only would this legal proceeding have perhaps ended differently, but it may have not commenced in the first place.

For more information on filing effective patent applications, please contact a patent lawyer or patent agent at PCK Intellectual Property.


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The contents of this article are provided for general information purposes only and do not constitute legal or other professional advice of any kind.

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