Developing Story: Search engines of as much interest for me as Kansas City Royals are to New York Yankees: a good way to build up sizeable lead on those dreaded Red Sox. Similarly I just view Yahoo or Google as a tool to solicit information I am currently interested in. Sometimes, a GMail impresses me or the adoption of RSS or something like that. Thanks to a tip from a Silicon Valley insider, I stumbled onto a rather obscure patent: US patent # 6,704,727 awarded to Overture Services on March 9, 2004. Overture as you might know is now owned by Yahoo, yeah.. that other search company.

The patent which was filed on January 31, 2000 could turn out to be yet another migraine for the company of the moment – Google. Why? After going through the entire patent, I realized that this is a patent that covers displaying paid and unpaid listings on the results page after a search term is input. Extrapolating a bit, what this means, is that those blue and green paid listings and all those text ads that show up on the Google page after you search for “Paris Hilton Video” and how they are displayed could now very well be under a Yahoo patent! Actually this could be a bigger nightmare for other search wannabes as well.

Having said that, this is clearly what i understand. I am no attorney, or no patent expert, so folks can make your own judgment. There are clearly smarter people out there who know more about these two companies than me, and I hope they can help set the record straight. Here is the description, right from the patent filing.

… web page operators often seek to increase the likelihood that their web page will be seen as the result of a search. One type of search engine that provides web page operators with a more predictable method of being seen as the result of a search is a “pay for performance” arrangement where web pages are displayed based at least in part upon a monetary sum that the web page owner has agreed to pay to the search engine operator. The web page operator agrees to pay an amount of money, commonly referred to as the bid amount, in exchange for a particular position in a set of search results that is generated in response to a user’s input of a search term….

In accordance with one embodiment of the invention, a set of search terms is provided to a user in response to an input that is provided by the user. In response to the input, a first set of search terms is generated from a master set of search terms where a portion of each of the search terms in the first set match the input. A second set of search terms is then selected from the first set of search terms based upon a value score that is established for each search term. The value score can be established based, at least in part, upon how much revenue is generated by the search term. The second set of search terms can then be displayed to the user.

According to another embodiment of the invention, in response to input provided by the user, a first set of search terms is generated where the terms are associated with the input, but do not match the input. A second set of search terms is then selected from the first set of search terms based upon a value score that is established for each search term. The value score can be established based, at least in part, upon how much revenue is generated by the search term.

Most of you must be wondering, well didn’t Yahoo and Google settle a patent dispute recently? Well that dispute was related to Overture’s U.S. Patent No. 6,269,361. As part of the settlement, Google gave Yahoo about 2.7 million extra shares.

Google S-1 Filing, Amended August 9, 2004

For example, Overture Services (now owned by Yahoo) sued us, claiming that the Google AdWords program infringes certain claims of an Overture Services patent. It also claimed that the patent relates to Overture Services’ own bid-for-ad placement business model and its pay-for-performance technologies. We recently settled this dispute.On August 9, 2004, we and Yahoo entered into a settlement agreement resolving two disputes that had been pending between us. …. The first dispute concerned a lawsuit filed by Yahoo’s wholly-owned subsidiary, Overture Services, Inc., against us in April 2002 asserting that certain services infringed Overture’s U.S. Patent No. 6,269,361. In our court filings, we denied that we infringed the patent and alleged that the patent was invalid and unenforceable. As part of the settlement, Overture will dismiss its patent lawsuit against us and has granted us a fully-paid, perpetual license to the patent that was the subject of the lawsuit and several related patent applications held by Overture.

The settlement gave Google access to a whole bunch of Yahoo patents, but I am not sure if this one – US Patent # 6,704,727 – was part of the deal. I have already sent emails to the PR folks at these two fine companies, and probably would know more on Monday. There are clearly smarter people out there who know more about these two companies than me, and I hope they can help set the record straight. Who knows, it might by much ado about nothing, but my sources say otherwise.