The popularity of paid search advertising has prompted expensive legal challenges, as search engines vie for a larger slice of the market. At the center of those disputes is Yahoo, which claims to have acquired a patent that protects the business method behind paid search advertising, stemming from its purchase of Pasadena-based Overture Services Inc.


Those patent claims have been challenged in a federal suit by FindWhat.com, a second-tier search engine company. Last week those claims were left unresolved after a federal judge in Los Angeles declared a mistrial in the infringement case.


A lot remains at stake. Should the patent be invalidated, analysts expect more companies to start offering paid searches, challenging the dominance of Yahoo and Google Inc. (Google is paying Yahoo an undisclosed license fee as part of a separate patent infringement case that was settled last year.)


Should the patent be enforceable, Yahoo would be empowered to sue other search engines that offer, or plan to offer, paid searches that they claim do not infringe on Yahoo's patent. With a patent, Yahoo could also generate more revenue in licensing fees.


"Overture figured out a way to monetize search results," said Jim Friedland, senior research analyst at SG Cowen & Co.. "If you are a retailer trying to sell plasma TVs and you bid for the words, 'plasma TV,' chances are someone wants to buy it. That's a very high return. You can see how you can generate a higher return on your marketing dollars."


* The full story is available in the May 16 edition of the Los Angeles Business Journal.

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