Google Acquisitions are Relevant to Determining Reasonable Royalty

For purposes of determining a reasonable royalty, the court permitted certain evidence of Google's acquisitions of other companies. "Because Google relies upon acquisitions, instead of traditional licenses, to procure intellectual property, [plaintiff's damages expert] used these acquisitions in his analysis." Specifically, the court permitted evidence (i) "that Google valued [an additional 2 billion impressions per week for Google’s AdSense for Content] at $2 billion" (gleaned from Google's acquisition of Doubleclick), (ii) "that Google paid 23% of its net assets . . . to delay a competitor from participating in the AdSense for Content market" (gleaned from Google's acquisition of Applied Semantics), and (iii) that "in a hypothetical negotiation, Google might have paid [plaintiff] a running royalty or some other non-fixed amount" despite Google's argument that it has "a strong preference for lump-sum licenses" (gleaned from Google's acquisition of dMarc). The court excluded evidence of "the dollar amount Google paid to acquire any organization" and evidence concerning Google's acquitition of YouTube and AdMob. Unlike the dMarc acquisition, plaintiff failed to show that the YouTube and AdMob acquisitions refute Google's stated preference for lump sum licenses.

Function Media, LLC v. Google, Inc. et al., 2-07-cv-00279 (TXED January 15, 2010, Memorandum Opinion & Order) (Everingham, M.J.)