• by Laurie Sullivan  @lauriesullivan, September 1, 2010

A U.S. patent detailing a cost per action (CPA) revenue model for search engines goes on the auction block in November. For those who can't wait, AnchorFree Founder David Gorodyansky has put a $2 million 'buy it now' price tag on the deal. A company spokesperson confirmed the sale, but declined to comment.

The patent describes a pricing model that charges search advertisers based on a CPA model rather than cost-per-click (CPC). It also covers giving ad fees back to the person searching on an engine. These descriptions appear in the claims section.

In general, the patent's "claims" section typically lists more than one. Independent claims don't rely on any other claims. To infringe a patent, a company must do everything in one claim, or something equivalent. For example, a patent for a table with three legs might not infringe on a patent for a table with four legs. But supporting the legless corners of the table with a vase might infringe on the patent, explains a patent attorney who asked for anonymity.

While a company relying on the claims can infringe on the patent, Joseph Rosenbaum, attorney at Reed Smith, New York, believes the most interesting part of a patent resides in the process leading to future innovation by identifying a practical use for technology. "The development and issues can shape the face of innovation," he says. "In some cases where you have a bright idea and that idea gets transformed into a patentable implementation, it spans innovation because people become interested in the model. The patent stimulates a response."

Google also offers two variations to advertisers of a CPA revenue model. David Szetela, Clix Marketing founder, says it should not affect Google or its advertisers unless Gorodyansky's patent has some magic way to immediately boost search volume, and Microsoft's failed cash-back program relied on a CPA model.

"The idea was advertisers would essentially pay a CPA for actual conversions and a portion of that fee would be passed along as incentive to the searcher," explains Aaron Goldman, marketing guru and author of "Everything I Know about Marketing I Learned from Google." "Microsoft never gained the adoption by advertisers it needed to scale Cashback, and without a lot of offers, it wasn't able to provide a great user experience."

Goldman explains that trying to get advertisers comfortable with implementing a new tracking code on their Web sites that allows search engines to track actions becomes one of the biggest challenges in a pure CPA search model. Fortune 500 companies and Internet retailers are already "leery of letting the fox into the henhouse."

Other patents related to advertising up for sale include mobile listed by CNON Innovations for $15 million, and Internet advertising using gaming for $1.75 million listed by Steven Fuchs.