Pasadena-based Overture, formerly known as GoTo, found success before Google with its advertising model. Its advertisers bid for placement on relevant search results and pay Overture only when someone clicks on their listings.
The company was awarded a US patent in July 2001 that covers a "system and method for influencing a position on a search result list generated by a computer network search engine." It sued Google for infringement in April 2002 over Google's AdWords service.
AdWords, launched in February 2002, also allows advertisers to sponsor particular search terms so that, for a fee, whenever that term is searched the advertiser's link will appear next to the search results. Google has always denied infringement.
Yesterday Google and Yahoo! announced that the suit had been dismissed and that Google will license the patents concerned. The two companies also announced that they had resolved an ongoing dispute relating to shares due to Yahoo! under an agreement made in 2000.
As part of the settlement Google has agreed to give 2.7 million shares to Yahoo!, which has been an investor in Google since the early days of the company.
According to reports, Google has revealed in a filing with the US Securities and Exchange Commission that the settlement will result in a charge of between $260 million and $290 million.
"We are pleased to have resolved these issues, and with the terms of the agreement," Google spokesman Steve Langdon told Reuters.