• by Wendy Davis  @wendyndavis, February 18, 2008

Google and Microsoft were hit with a lawsuit last week by a company claiming to own a patent on paid search methods.

The company, Paid Search Engine Tools of Liberty Township, Ohio, said in its lawsuit that Google's AdWords program, as well as Microsoft's paid search platform, adCenter, violate patent no. 7,043,450, "Paid Search Engine Bid Management."

That 2006 patent was for a method of optimizing keyword bids, said J. Robert Chambers of Cincinnati, the attorney for Paid Search Engine Tools. The abstract filed with the U.S. Patent Office describes it as a system for monitoring keyword bids across one or more search engines so that that marketers can make adjustments to their pay-per-click bids.

Chambers said that Paid Search Engine Tools previously provided this type of service to marketers, but that Google, Microsoft and Yahoo cut into the company's business when they began to offer the service directly. Chambers said the company is seeking damages and an injunction against Google and Microsoft.

The case was brought in the Eastern District of Texas, Marshall Division--considered to be among the most plaintiff-friendly venues in the country for patent lawsuits. Google, which faces other patent infringement suits in that division, has previously advocated for restrictions on the localities where patent holders can file lawsuits, urging that lawsuits be brought in venues with a reasonable connection to the case.

Last September, Paid Search Engine Tools filed a nearly identical lawsuit against Yahoo. In response, Yahoo asked the court to dismiss the lawsuit and declare Paid Search Engine Tools' patent invalid.

Previously, Yahoo sued Google for infringing a patent relating to its paid search platform. That case was settled in August of 2004, immediately before Google went public.