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June 17, 2006
VoIP Wars
VoIP
is a cataclysmic technology for landline telephony.
Vonage is the early market leader, but,
after recently bruising itself with the second-worst IPO in U.S. history, may be
cut down by patent infringement, as freshly rabid Verizon joins Sprint Nextel in
assertion, while other VoIP patent battles rage and loom.
Earlier this week, Verizon hit Vonage with an infringement suit for seven patents. The suit was filed in the Eastern District of Virginia, a popular patent plaintiff venue.
The seven patents, not all specific to VoIP, relate to using WiFi handset in a VoIP network, interfacing packet-switched and circuit-switched networks, call services such as call forwarding and voicemail (both of which Vonage does a wonderful job of), and billing and fraud detection.
Verizon's patent assertion prowess outshines its business savvy. While Verizon does not fess up to its crappy customer service, Verizon admits that Vonage has eaten its lunch in the VoIP market: "Vonage has gained 1.1 million customers - many of whom are Verizon's former customers - in the past 15 months. In the first quarter of 2006 alone, Vonage gained approximately 325,000 new subscribers. Vonage's expanded marketing and advertising of its infringing services threaten to shift more customers and goodwill to its business at Verizon's expense."
Last October, Sprint Nextel smacked Vonage with its own seven-patent suit; that case is ongoing.
Vonage's #1 patent problem may be that it has no counterpunch: Vonage holds no VoIP patent with which it might counterclaim. Vonage may end up one of those clichéd frontier pioneers: dead, full of [patent] arrows in its back.
Also this week, from the blazing Eastern District of Tejas, C2 Communications Technology whacked Verizon, AT&T, Qwest Communications, Bellsouth and Sprint Nextel, along with others, in a fiesta of infringement assertion for 6,243,373, which broadly claims interfacing a VoIP phone to a PSTN (regular) telephone.
Earlier this month, Net2Phone charged Skype & its owner eBay with infringing 6,108,704, which claims point-to-point network communciation.
Meanwhile, over at the trolling tables, Rate Technology Inc. (RTI) is trying to gag Google with a $5 billion tab for GoogleTalk. RTI usually settles for a one-time fee of up to $5 million. RTI is also going after other parties, including Skype/eBay and Time Warner, owner of the world's biggest Internet dog: AOL.
AOL settled a VoIP patent suit from Klauser Technologies in April this year. Klauser is chatting with other major players in the VoIP business about licenses.
This VoIP patent gangbang is just getting started. VoIP is a fertile ground for patent battles, as customers abandon traditional phone services for low-cost VoIP, traditional telephony companies grab for financial life preservers in the form of patent assertions, and patent-holding companies with network patents eyeball the potential for milking cash cows from the nascent VoIP business.
Posted by Patent Hawk at June 17, 2006 12:34 AM | Patents In Business