I/P Engine, Inc. v. AOL, Inc. et al

Filing 1

COMPLAINT against AOL, Inc., Gannett Company, Inc., Google, Inc., IAC Search & Media, Inc., Target Corporation ( Filing fee $ 350 receipt number 14683024186.), filed by I/P Engine, Inc. (Attachments: # 1 Exhibit A, # 2 Exhibit B, # 3 Receipt, # 4 Civil Cover Sheet, # 5 Letter)(ecav, )

FILED UNITED STATES DISTRICT COURT EASTERN DISTRICT OF VIRGINIA ALEXANDRIA DIVISION ) I/P ENGINE, INC., CLERK US DISTRICT COURT ) Plaintiff, v. ) ZOII SEP 15 A 10 ALEXANDRIA. VIRGINIA Civ. Action No. g.'U C\/&#- ) ) AOL, INC., GOOGLE, INC., ) ) IAC SEARCH & MEDIA, INC., ) GANNETT COMPANY, INC., and ) TARGET CORPORATION, COMPLAINT ) Defendants. Jury Trial Demanded ) ) Plaintiff I/P Engine, Inc. ("I/P Engine") hereby makes this complaint against Defendants AOL, Inc. ("AOL"), Google, Inc. ("Google"), IAC Search & Media, Inc. ("IAC"), Gannett Company, Inc. ("Gannett"), and Target Corporation'("Target") as follows: NATURE OF ACTION 1. This is a patent infringement action in which I/P Engine seeks compensatory damages, past and future, amounting to no less than reasonable royalties. In the search engine industry, results are positioned on websites based on their determined "rank." For example, in search advertising, an advertisement with the highest "rank" appears in the first position, and so on down the page. Search engines seek to place the high quality advertisements in the best positions because such placements are critical to attracting advertisers, pleasing end users and producing search advertising revenues (the primary source of revenue for search engines). Andrew K. Lang and Donald M. Kosak, inventors of U.S. Patent Nos. 6,314,420 ("the '420 patent") and 6,775,664 ("the '664 patent") (collectively "the patents-in-suit"), invented a relevance filtering technology that is used in the search engine industry, and that has become the dominant technology used to place high quality advertisements in the best positions and thereby generate substantial revenue. At least some of the defendants knew about the patents-in-suit for years, and despite such knowledge, these defendants continued to use it unlawfully. This patent infringement action seeks a remedy for this unlawful taking. JURISDICTION AND VENUE 2. This action arises under the United States Patent Act, codified at 35 U.S.C. § 1 et seq., and in particular, 35 U.S.C. §§ 271 and 281-285. 3. This Court has original jurisdiction over the subject matter of this action under 28 U.S.C. §§1331 and 1338(a). 4. This Court has personal jurisdiction over AOL, Google, IAC, Gannett, and Target (collectively "Defendants") because, on information and belief, Defendants have transacted business in this District, have committed acts of infringement in this District, and continue to commit acts of infringement in this District. 5. Venue is proper under 28 U.S.C. §§ 1391(b), 1391(c) and 1400(b) because, on information and belief, Defendants have transacted business in this District, have advertised and solicited business in this District, have committed acts of infringement in this District, and have established minimum contacts with this District. PARTIES 6. 1/P Engine is a corporation organized and existing under the laws of the Commonwealth of Virginia, with its corporate headquarters and principal place of business in New York, New York. 7. On information and belief, AOL is a corporation organized under the laws of the State of Delaware, with its corporate headquarters and principal place of business at 770 Broadway, New York, New York 10003. A significant portion of AOL's operation directed to the infringing technology remains at the campus of its former corporate headquarters at 22000 AOL Way, Dulles, Virginia 20166, where AOL employs thousands of people. On information and belief, AOL generates millions of dollars of search advertising revenue in this District. Moreover, on information and belief, AOL formed its search advertising operation by combining various advertising units of acquired entities. On information and belief, AOL is supporting its search advertising operation at its campus in Dulles, Virginia. 8. On information and belief, Google is a corporation organized under the laws of the State of Delaware, with its corporate headquarters and principal place of business at 1600 Amphitheatre Parkway, Mountain View, California 94043. A portion of Google's operation is conducted at a location in Reston, Virginia, where on information and belief about fifty (50) employees work on research, development, or design for Google. Moreover, Google has a technical facility in Reston, Virginia, where Google reportedly houses substantial computing resources including, on information and belief, its search advertising infrastructure. Google also, on information and belief, has two other technical facilities within this District in Ashburn, Virginia and Virginia Beach, Virginia. 9. On information and belief, I AC is a corporation organized under the laws of the State of Delaware, with its corporate headquarters and principal place of business at 555 12th Street, # 500, Oakland, California 94607. IAC operates Ask.com and, on information and belief, Ask.com maintains a technical facility in Ashburn, Virginia, where Ask.com reportedly houses data center resources including, on information and belief, some of its search advertising infrastructure. 10. On information and belief, Gannett is a corporation organized under the laws of the State of Delaware, with its corporate headquarters and principal place of business at 7950 Jones Branch Drive, Tysons Corner, Virginia 22107. On information and belief, Gannett employs thousands of people within this District and generates millions of dollars of revenue in this District including search advertising revenue. 11. On information and belief, Target is a corporation organized under the laws of the State of Minnesota, with its corporate headquarters and principal place of business at 1000 Nicollet Mall, Minneapolis, Minnesota 55403. On information and belief, thousands of residents within this District use Target's website and thus generate search advertising revenue. FACTUAL BACKGROUND The Inventors' Involvement in Early Search Companies 12. I/P Engine is a privately held, wholly-owned subsidiary of Innovate/Protect, Inc. that employs Mr. Lang as the company's Chief Executive Officer. Mr. Kosak is a technology advisor to Innovate/Protect, Inc. I/P Engine recently purchased the patents-in-suit from Lycos, Inc. ("Lycos") - an early participant in the Internet search industry. 13. Messrs. Lang and Kosak were researchers and software developers during the early days of the Internet search industry. 14. In 1995, Mr. Lang was a Carnegie Mellon doctoral student researching his dissertation on adaptive filtering and recommendation system technologies. At that time, the Internet search industry was growing rapidly. 15. One of Mr. Lang's thesis advisers, Professor Michael Mauldin, recommended that Mr. Lang start his own company. Shortly thereafter, Mr. Lang did so, leaving Carnegie Mellon to form Empirical Media Corporation, which later was renamed Wise Wire Corporation ("WiseWire"). 16. Mr. Kosak was the first technologist hired into Wise Wire's founding team. Mr. Kosak added years of experience in the commercial search engine field to the Wise Wire team having previously led several projects directed to search technologies. 17. In the mid-to-late 1990s, the amount of content (e.g., web pages) available on the Internet was relatively small compared to today. Users frequently accessed Internet web pages by visiting portal sites, which presented content categorized directories through which the users could select links to available web pages. 18. Lycos was one of the leading portal sites of this time. Mr. Lang's Carnegie Mellon professor, Michael Mauldin, was Lycos' founder. 19. Lycos launched its website in 1994. Lycos' website included a directory-based portal and also a query-based search engine; both of which provided access to its content catalog. 20. By 1996, Lycos' content catalog had grown substantially, and Lycos was one of the largest websites of its kind. 21. Other large search sites at the time, such as AOL (known then as America Online) also maintained large content catalogs. 22. As the volume of available Internet content continued to grow and the rate of that growth increased, manual categorization processes presented problems in terms of the amount of material to be categorized and the accuracy of such categorization. 23. As part of managing its content categorization processes, Lycos engaged Messrs. Lang and Kosak through WiseWire to develop filtering techniques to more efficiently, and automatically, categorize content for Lycos' directories including for its advertisements. 24. After working together on several projects for Lycos' website, Lycos acquired WiseWire. Messrs. Lang and Kosak then joined Lycos, Mr. Lang as Chief Technology Officer and Mr. Kosak as Senior Director of Engineering. 25. The volume of Internet content and Internet usage eventually inundated directory- based portal sites, and query-based search engines incorporating algorithmic search became prominent. Lycos, however, decided to go another direction with its business. Lycos continued as a major portal provider and stopped investing money into search engine/system research and development, including the technology developed by Messrs. Lang and Kosak. Lycos focused instead on portal network operations with regional sites, chat services, personal home pages, horoscopes and other features that would supplement these offerings. The Search Engine Industry 26. In addition to algorithmic search, query-based search engines experimented with several marketing techniques, generally known as search engine marketing and search advertising, to monetize Internet usage; however, early models had limited success. 27. In 1998, GoTo.com launched pay-per-click ("PPC") based advertising. 28. GoTo.com, later renamed Overture Services, Inc. ("Overture"), obtained success using PPC systems that provided a list of advertisements according to the bid amounts paid by advertisers. 29. Overture's PPC auction model required an advertiser to pay when an end user clicked on the advertiser's link that was displayed along with the advertisement on the results page. The advertiser's bid (e.g., the price each advertiser was willing to pay per click) determined how high each advertiser's link would be ranked relative to other advertisers, and thus an advertiser's bid determined whether and where that advertisement would be displayed a results page. The advertisement with the highest bid appeared in the first position. 30. The PPC model had shortcomings, however. For example, this model led to free on advertisement impressions for advertisers because an advertiser could bid its way to the top of the ranking and have its advertisement displayed, thereby increasing the likelihood that end users would see the advertiser's advertisement, even if the user was not likely to be interested in clicking the advertiser's link (i.e., the advertisement was not relevant to the user's search query). The '420 and '664 Patents 31. Before the search engine industry, Messrs. Lang and Kosak conceived of improved technologies needed to produce better search results for users, such as advertising search results. They adapted their filtering techniques to apply to search systems and invented filtering systems and methods that: (i) filter items for content relevancy to a search query or to a "wire," (ii) provide feedback information from prior users, and in filtering the items, (iii) combine the provided feedback information with the content relevancy to determine whether (or where) an item should be "ranked" in a search results response to the query or the "wire" ("Lang/Kosak Relevance Filtering Technology"), as covered by the claims of the '420 and '664 patents. 32. The '420 patent is directed to search engine systems and methods that incorporate the Lang/Kosak Relevance Filtering Technology to provide improved search results to user queries. 33. The '664 patent, which is a related patent to the '420 patent, is also directed to search engine systems and methods incorporating the Lang/Kosak Relevance Filtering Technology. 34. Search engines have incorporated the Lang/Kosak Relevance Filtering Technology, as claimed by the '420 and '664 patents, within their own search and search advertising systems to provide better results. 35. The Lang/Kosak Relevance Filtering Technology is substantially better than other systems, such as bid-based PPC search advertising systems. 36. Claim 10, for example, of the '420 patent covers, in part, a search engine system that filters results based on a combination of "informons on the basis of applicable content profile data for relevance to the query" and "collaborative feedback data from system users relative to informons considered by such users." 37. The accused systems in this litigation use the Lang/Kosak Relevance Filtering Technology by filtering and presenting search and search advertising results based on a combination of (i) an item's content relevance to a search query; and (ii) click-through-rates from prior users relative to that item. 38. At least since 2006, while Lycos was the owner of the patents-in-suit, Lycos marked the '420 and '664 patents on its website. Development of the Search Engine Industry 39. According to Google's Chief Economist, "not only are search engines widely used, they are also highly profitable." Google generates billions of dollars of revenue because of its search advertising. Google's Chief Economist also stated that a search engine's "primary source of revenue comes from selling advertisements that are related to the search queries. Since end users tend to find these ads to be highly relevant to their interests, advertisers will pay well to place them. ... Search engine ads are one of the most effective forms of advertising." 40. AOL's current CEO similarly stated that search advertising is AOL's "primary source of revenue." AOL has generated billions of dollars of revenue due to search advertising. 41. Almost all major search advertising systems operating today incorporate the Lang/Kosak Relevance Filtering Technology. These search engines market their search advertising systems based on the features of the Lang/Kosak Relevance Filtering Technology covered by the '420 and '664 patents. Google's Use of the Patented Technology 42. Google has used and continues to use search and search advertising systems that adopt the Lang/Kosak Relevance Filtering Technology. 43. For example, Google adopted the Lang/Kosak Relevance Filtering Technology with its use of "Quality Score." Google's search advertising systems filter advertisements by using "Quality Score" which is a combination of an advertisement's content relevance to a search query (e.g., the relevance of the keyword and the matched advertisement to the search query), and click-through-rates from prior users relative to that advertisement (e.g., the historical clickthrough rate of the keyword and matched advertisement). 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These three search advertising systems have generated significant revenues for AOL. AOL's Knowledge of the Patented Technology 61. On information and belief, AOL was aware of the '420 patent. 62. AOL owns at least one search advertising-related patent - U.S. Patent No. 7,165,119 ("the '119 patent") - that lists the 4420 patent on its face. 63. The 4119 patent is entitled "Search Enhancement System and Method Having Rankings, Explicitly Specified by the User, Based Upon Applicability and Validity of Search Parameters in Regard to a Subject Matter," and lists Edmund J. Fish of Dulles, Virginia as the inventor. 64. During prosecution of the patent application that issued as the '119 patent, AOL 13 disclosed the '420 patent to the PTO. 65. The specification of AOL's '119 patent, as originally filed with the PTO, expressly discusses the '420 patent. IAC's Use of the Patented Technology 66. IAC's website, Ask.com, has used and continues to use search and search advertising systems that adopt the Lang/Kosak Relevance Filtering Technology. 67. For example, Ask.com uses the Lang/Kosak Search Filtering Technology in at least two of its search advertising systems. 68. First, in its own search advertising system called Ask Sponsored Listings, Ask.com filters advertisements using the Lang/Kosak Relevance Filtering Technology by combining an advertisement's content relevance to a search query (e.g., the relevancy of ads) and click- through-rates from prior users relative to that advertisement (e.g., the click volume of ads in comparison to the ads of other advertisers), as covered by claims of the '420 and '664 patents. \VbiT dstmaaa tit p'ueaiis ef ais" taps: «!,coiths!p.:oin cs-cis »sUff pip eoiusei sid_jdp.pip:p_£jij!d=12a*p_«d=4Xoa)... SponsoredListings »Accounts .^ ^ M,^ Reports Help Search by Keyword Cewwits Search —) Print Answer Email Answer What determines the placement of ads? E! What determines the placement of ads? Placeman: of ads en jhe Ask Sponsored listings (ASL) network rr»ay vary across the ASL netwa.-k according ;o the following factors: " your targeting choices ASL network usef acions 3rd ASL network comers matched an* your keywords jrc aos :he relevancy ol you- ads the maximum CPCs submitted by you and by other advertsers !he cBsk volume your ads received in comparison to the ads of other aeVenisers (CTRi tf» naiire of the ASL network web srres and setvees and »» dispby by ASL network web sites and services of other ron-AS- ad«rasements ASL does nol guarantee that an ad wa be displayed en any par.«Oa( ASl neflA-crk web si:e o- service. Oir ASL network partners may change the rarfcing of ads when blending :hem w.» spensote-d Inks 'rom other proviJets The number of sponsored listings displayed by ASL network parirters and whether jixh partners also diplays other ads from another pad listings provider en its service will 3ff»ct yetr ad's rank. 14 69. Second, Ask.com uses Google's search advertising system that uses the Lang/Kosak Relevance Filtering Technology and filters advertisements using a combination based on an advertisement's content relevance to a search query, and click-through-rates from prior users relative to that advertisement. 70. On information and belief, both of these search advertising systems used by I AC generate advertisements and associated links using the Lang/Kosak Relevance Filtering Technology when end users search from Ask.com's websites including, for example, its main webpage. 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Camping Stoves ■ Walmart com Find outdoor cooking eqmpmeni including rjiilk and CAmpiog Steves at always low puces Saw money i>e better, at Wa'mait com 71. Ask.com has generated substantial revenues due to its search advertising systems. Others that Use the Patented Technology 72. Other websites use the patented technology in at least their search advertising systems to generate revenue. 15 73. E-commerce website6 such as Target and publishing websites such as Gannett use the Lang/Kosak Relevance Filtering Technology to rank and display advertisements alongside their query-based search results. 74. Target displays advertisements alongside its product search results. t -<•.; 1.1'J e1 £41 Guest3 Who Searched For "grids" Ultimately Bought Oi»e* Mo i Wefrei Ono Tou* Cora BMbectie Covci m F«s Up To A Ad.byCoogU Webtr r.rilk e on rtugs Salcctton Weber Grill CaU for Delivery. MO. DC VA Weber firlllt nn Sqlg Huoe SovtRQs on Weber Grills. 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