Microsoft and Vringo’s subsidiary firm I/P Engine have agreed to settle a patent lawsuit that was pending in the US District Court for Southern District of New York.

I/P Engine sued Microsoft in January this year alleging the software major has infringed two of its patents.

The patents were US Patent No. 6,314,420 and US Patent No. 6,775,664, which allegedly allow its Bing Internet search engine to most efficiently display advertisements for its users.

Under the settlement, Microsoft has agreed to pay $1m and sign a licensing agreement with Vringo.

Microsoft has also agreed to pay 5% of any amounts Google pays Vringo to use the company’s patents.

In 2012, Vringo sued Google, AOL, IAC/InterActiveCorp and several other firms for allegedly infringing its patents.

Vringo said its intellectual property portfolio consists of more than 500 patents and patent applications covering telecom infrastructure, Internet search, and mobile technologies.

The company added that the patents and patent applications have been developed internally, and acquired from third parties.