A lawsuit alleges Microsoft has been infringing patents that allow internet search engines to most effectively place advertisements.

I/P Engine Inc said in the suit filed in Manhattan federal court that Microsoft uses search technology based on inventions by two employees of I/P Engine's parent company, Vringo.

Microsoft uses the technology in systems that generate advertisements and associated links for users of the world's largest software company's search engine, Bing, the lawsuit said.

Microsoft did not immediately respond to a request for comment. A spokesman for Vringo declined to comment.

In November 2012, a Virginia jury awarded I/P Engine approximately US$30 million in damages after it found that companies including Google and AOL had infringed the same patents that are at issue in the Microsoft suit.

Following I/P Engine's announcement of the verdict, however, its parent company's stock slid by as much as 10 per cent. The company had been seeking damages of at least US$696 million.

In the lawsuit filed Thursday, I/P Engine claimed that Microsoft has willfully infringed its patents. I/P Engine said that one of its patents was referenced by the US Patent and Trade Office in 2003 when the agency rejected a similar Microsoft patent application.

In patent cases, a party can win higher damages if infringement is found to be willful.

The case is I/P Engine, Inc v Microsoft Corp, US District Court for the Southern District of New York, No. 12-688.

- Reuters

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