Google Settles Lawsuits With Yahoo

by Glen Shapiro, LawAndTax-News.com, New York

12 August 2004

Google and Yahoo have settled two disputes over patents related to search and advertising technology, and an additional claim from Yahoo over a year 2000 agreement which called for Google to issue share warrants to Yahoo.

Google has agree to issue 2.7 million shares to Yahoo in settlement of all these disputes, which could be worth well over $300 million if Google's upcoming IPO goes ahead on anything like the proposed terms.

Google had agreed to license a patent held by Yahoo's Overture unit related to the way advertisements are attached to search results, and Yahoo was alleging that Google was using the Overture system inappropriately.

However, Google's IPO is looking rocky. The company has insisted on setting the price for its shares through an auction system which may well deprive professional investors of the immediate rise they have come to expect from IPO stocks. For the same reason, some sub-underwriters are said to be unhappy, although lead banking advisers, Credit Suisse First Boston and Morgan Stanley, appear to be content. There is anecdotal evidence that individual investors think the price range set by Google is too high.

The float has also been threatened by a technology problem which delayed the opening of a website for institutional investors to register to bid, and by an investigation mounted by Californian regulators into the company's failure to register 33m shares issued under its employee stock options plan with the Securities and Exchange Commission.

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