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Yahoo, Miva settle pay-per-click patent suit

Settlement follows licensing by Google, others in the lucrative keyword search ad market.

Online marketer Miva has agreed to pay Yahoo $8 million and ongoing royalties to settle a patent infringement lawsuit over pay-per-click technology used in search result ads.

Neither Yahoo nor Miva, acquired by FindWhat.com in 2003, disclosed terms of the royalty payments that are part of the settlement, announced Monday in Miva's quarterly financial report. The agreement ends a three-year legal battle between the two companies.

"We are pleased to have this behind us and eager to move forward," Craig Pisaris-Henderson, chief executive of Fort Myers, Fla.-based Miva, said in a statement.

Google agreed to settle a similar lawsuit a year ago. The search giant agreed to license Yahoo pay-per-click technology, as well as give Yahoo 2.7 million shares of its common stock to settle the patent infringement lawsuit and another dispute related to Yahoo's right to buy shares in Google.

"This patent has now been battle-tested in two litigations, both of which resulted in other companies deciding it was in their best interest to take a license of these patents," Joseph Siino, vice president of intellectual property at Sunnyvale, Calif.-based Yahoo, said in an interview.

Lycos and several online marketers also have agreed to license patents for the technology, without any lawsuits being filed in those cases, he said. "We're seeing a real upsurge in companies coming to us to talk about taking licenses," Siino added.

Ask Jeeves, recently acquired by InterActiveCorp, said earlier this month that it would let advertisers bid for ad placement on its search results, like Yahoo and Google do.

An Ask Jeeves spokesman said: "We do not believe we are in violation of those patents with our recently introduced PPC (pay-per-click) search advertising product."

Meanwhile, sources have said Microsoft is in discussions to buy adware maker Claria in a move to own an advertising network to compete with MSN rivals Google and Yahoo. A Microsoft spokeswoman declined to comment.

Siino declined to comment specifically on search ad-related actions or plans by Ask Jeeves or MSN, except to say, "We are interested in and happy to discuss licensing opportunities for anyone who plans to use these innovations."

Under the pay-per-click system, advertisers bid for top placement in search results related to specific keywords and pay only when Web surfers click on their text ads. Yahoo acquired the technology when it bought Overture Services in 2003.

Paid search, criticized as a business model when Overture first launched it in 1998, has since become a lucrative practice for search providers, and represents the lion's share of revenue for search leader Google.