(By Balachander) Vringo Inc. (NYSE: VRNG) won its patent-infringement suit against Google (NASDAQ: GOOG) and the software developer for cellphones was awarded $30 million in damages.
After finding that the asserted claims of the patents were both valid and infringed by Google, the jury found that reasonable royalty damages should be based on a "running royalty", and that the running royalty rate should be 3.5 percent.
The jury found the patents are valid and Vringo will receive a royalty rate on the patents until they expire in 2016, Dow Jones reported, citing source familiar with the case.
Of the $30 million awarded to Vringo, Google will pay $15.9 million, AOL (NYSE: AOL) will pay $7.9 million, IAC (NASDAQ: IACI) will pay $6.6 million.
The company alleged that Google infringed on patent technology Vringo purchased from Lycos Inc. Google used the patented technology by filtering and presenting search and search advertising results based on a combination of an item's content relevance to a search query; and click-through rates from prior users relative to that item.
Vringo's intellectual property portfolio consists of eleven patents, eight of which were acquired from Lycos Inc., as well as over twenty patent applications.
The complaint alleges that Google has adopted the patented technology with its use of Quality Score, according to regulatory filing from Vringo. Also, after adopting the patented technology, Google's market share significantly grew and its profits from search advertising considerably outpaced those of other pay per click advertising providers.
Google also allows third party publishers, for example AOL, IAC, Target and Gannett Media, to display advertising search results in response to search queries made on the third party websites.
"We would expect VRNG to receive a .75 percent royalty payment or $500 million payment for the trailing years and at least $100 million annually through 2016," ViewTrade Research analyst Peter D'Agostino wrote in a note last month. "Potentially, Google could settle with a discounted lump-sum payment for future royalties."
Vringo's shares plunged nearly 36 percent last Wednesday after U.S. District Judge Raymond Jackson ruled the company cannot collect damages for the six years prior to the lawsuit's filing last year, citing a long delay in filing its patent claim.
Shares remain halted at $4.25.