Vonage Loses Yet Another Patent Case

from the not-looking-good dept

Vonage has already had enough trouble actually making their business profitable without having to worry about a barrage of patent lawsuits over highly questionable patents. But thanks to a patent system that approves a tremendous number of overly broad patents on obvious ideas, that's what you get. Already appealing a similar case from Verizon, a jury has found Vonage guilty of violating a bunch of Sprint patents. Juries will often find in favor of the patent holder, so this isn't much of a surprise. Vonage will most certainly appeal and the case is far from over. However, given how much effort the company needs to put into fighting these patents, the company may not be able to survive. The really sad thing is that the technology behind VoIP has almost nothing to do with Vonage's success. There were a ton of companies that had tried and failed to make popular VoIP plays before (and after) Vonage. What Vonage did was actually innovate: taking the basic idea that everyone knew about, and turning it into an offering that people wanted to buy. That's where Verizon, Sprint and other incumbents failed. For them to come back afterwards, and claim patent infringement is simply sour grapes. They were unable (and unwilling) to create the services that people wanted -- and now they want to shut down the company that actually did innovate -- and they're likely to succeed. That's not how the patent system is supposed to work.


Reader Comments (rss)

(Flattened / Threaded)

  1.  
    identicon
    Danny, Sep 25th, 2007 @ 9:24pm

    Coming soon...

    We all know that as soon as Vonage calls it quits Sprint, Verizon, and all the other patent holders will start rolling out their own VoIP services. They will limited, locked down, and otherwise unlikable.

     

    reply to this | link to this | view in thread ]

  2.  
    identicon
    inc, Sep 25th, 2007 @ 9:31pm

    you forgot expensive

     

    reply to this | link to this | view in thread ]

  3.  
    identicon
    Tony, Sep 25th, 2007 @ 9:44pm

    Amen

    I couldn't agree more. The concept of VoIP is nothing new and has been implemented in many ways. Many of the technologies involved are used in products most of us use every day made by many different manufacturers. Why? because it's obvious. Encapsulating a PCM encoded voice stream using TCP/IP is a natural progression. If you're going to attack that, why not file lawsuits against everyone who streams video over IP. It's the same concept. THAT you've figured out how to send voice over IP SHOULD NOT BE PROTECTED! The exact code you've written to do it is another story. Nobody should be able to copy your code verbatim (Mike, chime in?) for their gain, but if you figure out how to do in on your own . . . hey, more power to you. That's what's called capitalism and creativity. It spurs innovation. "Hey, I think I can do that. Let's give it a try.". I'm sick and freaking tired of people (entities) claiming absolute rights to something that just makes sense. Are you afraid of competition?? Afraid someone's going to do it better than you? Man-up and take your offering and add some value to it to get people to buy YOUR product instead of the competition. Don't try to take down the competition by claiming a patent infringement on an obvious idea. Does the phrase "French button makers" have any meaning? (someone ought to get that...)

    Ok, enough ranting. OH, and death to the RIAA. :)

     

    reply to this | link to this | view in thread ]

  4.  
    identicon
    Tony, Sep 25th, 2007 @ 9:44pm

    Amen

    I couldn't agree more. The concept of VoIP is nothing new and has been implemented in many ways. Many of the technologies involved are used in products most of us use every day made by many different manufacturers. Why? because it's obvious. Encapsulating a PCM encoded voice stream using TCP/IP is a natural progression. If you're going to attack that, why not file lawsuits against everyone who streams video over IP. It's the same concept. THAT you've figured out how to send voice over IP SHOULD NOT BE PROTECTED! The exact code you've written to do it is another story. Nobody should be able to copy your code verbatim (Mike, chime in?) for their gain, but if you figure out how to do in on your own . . . hey, more power to you. That's what's called capitalism and creativity. It spurs innovation. "Hey, I think I can do that. Let's give it a try.". I'm sick and freaking tired of people (entities) claiming absolute rights to something that just makes sense. Are you afraid of competition?? Afraid someone's going to do it better than you? Man-up and take your offering and add some value to it to get people to buy YOUR product instead of the competition. Don't try to take down the competition by claiming a patent infringement on an obvious idea. Does the phrase "French button makers" have any meaning? (someone ought to get that...)

    Ok, enough ranting. OH, and death to the RIAA. :)

     

    reply to this | link to this | view in thread ]

  5.  
    identicon
    RandomThoughts, Sep 26th, 2007 @ 6:42am

    Let’s bring some reality here. First off, you are right in saying that Vonage has already had enough trouble actually making their business profitable. In fact, they never have been profitable. Ever.

    These patent lawsuits are not what will kill Vonage, their business model will. Their only product has become a commodity and is a product that their competitors would be willing to give away in order to gain greater customer wallet share. Would you invest in a company that has thin margins, doesn’t control its own product and has to rely on competitors for both service and quality?

    There were a ton of companies that tried and failed to make popular VoIP prior to Vonage but that was because the market wasn’t ready. Vonage had nothing to do with that. Vonage didn’t innovate, they marketed. They needed to upgrade their network and spend some money doing so. They didn’t, they hired more workers for their call center. They bought commercials. They bought banner ads. Sorry, but that isn’t innovation. Innovate by selling phone service (that is what they offered) and then get in trouble when they have to admit that its not really phone service because 911 didn’t work, e911 didn’t work.

    Are these patent lawsuits good or bad? I don’t know, but to say that Vonage innovated or is the example of anything is wrong. These patent lawsuits are not the only suits filed against Vonage. There are also shareholder lawsuits pending concerning their IPO. Vonage’s whole business model was getting as many customers as possible and then selling out. They missed their opportunity when Skype went first. After that, no one wanted to buy them and they had to go public.

    Forget about the lawsuits, because that is not what will kill Vonage. Their business model will.

    Will Vonage’s death end VoIP? Ummm, no. Pretty much all cable companies offer phone service using VoIP, Verizon has offered VoIP through VoiceWing, AT&T offers VoIP through CallVantage, many other companies offer VoIP. If you want to champion a case, don’t pick Vonage or Citron. Too many problems there.

     

    reply to this | link to this | view in thread ]

  6.  
    identicon
    RandomThoughts, Sep 26th, 2007 @ 6:54am

    Re: Coming soon...

    Ummm, they rolled out VoIP quite a while ago. VoiceWing, CallVantage, Sprint? Don't know. Most cable companies offer phone service through VoIP.

    One thing to remember with another item that actually hurts Vonage. The VoIP service you receive from a MCO is actually different from the service Vonage or any other pure play phone offering that is out there. Vonage calls run through the "public" Internet. That is "best effort" which might not be all that. If you have phone service from a cable company, your service runs on a different network. A better network. Your calls receive priority over other traffic. With Vonage, not so much.

    I would sign up for Cablevisions phone service, but my data goes down often, so why would I trust them with my phone service. If I had Vonage, when my data went out, my phone would go out. That is another problem that Vonage faces, their service relies on the ISP.

     

    reply to this | link to this | view in thread ]

  7.  
    identicon
    Thomason, Sep 26th, 2007 @ 7:09am

    Infringe run thru spell check won't become innovat

    Two juries, and so two judges, decide that Vonage infringes others patents, and you continue to call Vonage an innovator. To have such mistrust in the trial process and the common sense of jurors and legal guidance of judges is odd. They listened to all the evidence presented by the innovator, and rejected it, and presumably, none of us sat through any of that evidence. To keep going off on some notion of 'innovation' in the face of apparently compelling evidence of infringement and validity of patents that contradicts that notion is odd.

     

    reply to this | link to this | view in thread ]

  8.  
    identicon
    emichan, Sep 26th, 2007 @ 7:28am

    Re:

    Let’s bring some reality here. First off, you are right in saying that Vonage has already had enough trouble actually making their business profitable. In fact, they never have been profitable. Ever.

    These patent lawsuits are not what will kill Vonage, their business model will. Their only product has become a commodity and is a product that their competitors would be willing to give away in order to gain greater customer wallet share. Would you invest in a company that has thin margins, doesn’t control its own product and has to rely on competitors for both service and quality?


    I think you're missing the point of the story here. The patents being contested in these suits pretty clearly should not have been granted. There is a wealth of prior art on voip. Whether or not Vonage would have gone the distance as a pure voice provider, Sprint/Verizon/et al are using patent suits as a way of stifling competition, which is a pretty clear abuse of the patent system.

     

    reply to this | link to this | view in thread ]

  9.  
    identicon
    RandomThoughts, Sep 26th, 2007 @ 10:24am

    Sprint/Verizon is using these suits as a way of stifling competition? Seems to me that the cable companies are eating wireline's lunch by offering VoIP. Vonage never was their threat or target.

    Personally, I think they are trying to kill off Vonage just because they can, not because they were (or are) this huge threat.

    When they go after the cable companies, then I might believe that they are trying to stifle innovation.

     

    reply to this | link to this | view in thread ]

  10.  
    identicon
    RandomThoughts, Sep 26th, 2007 @ 1:32pm

    How many companies out there offer VoIP? All the wirelines (OK, so there are only 3 left), every cable company out there and how many pure play VoIP providers are there (one less since Sunrocket went DOA.)

    The answer is quite a few. Now how exactly has this hurt innovation?

    Even using your description of innovation that means cut the price and create stupid ads, how have patents made a difference one way or another?

    Patents have nothing to do with Vonage making it or not making it in the marketplace. The marketplace is determining this.

    Oh, and another judge decided today that Vonage is indeed voilating 2 of Verizon's patents and ruled that the injunction goes into place within a month. Of course, Vonage said that they had a workaround in place. One problem with that is that Vonage said in court that they didn't have a workaround in place after previously saying they did have a workaround in place. So, they either have a workaround in place or they committed perjury.

     

    reply to this | link to this | view in thread ]

  11.  
    icon
    Mike (profile), Sep 26th, 2007 @ 3:33pm

    Re:

    How many companies out there offer VoIP? All the wirelines (OK, so there are only 3 left), every cable company out there and how many pure play VoIP providers are there (one less since Sunrocket went DOA.)

    All of them only did so AFTER Vonage was tremendously popular and demonstrated the model to make the system work and how to market it to individuals.

    The answer is quite a few. Now how exactly has this hurt innovation?

    Because Vonage was the first one to figure out how to bring this to customers in a major way at a reasonable price. The telcos only did that after Vonage's success. Killing them for actually figuring out how to go to market in a way people want is a travesty.

    Patents have nothing to do with Vonage making it or not making it in the marketplace. The marketplace is determining this.

    Exactly. So why do the telcos who couldn't innovate get to use patents to pile on to Vonage's problems?

     

    reply to this | link to this | view in thread ]

  12.  
    identicon
    Danny, Oct 1st, 2007 @ 1:39pm

    Re:

    If Vonage's business model is what will be their ruin then why are the likes of Sprint and Verizon suing for patent infringement instead of trying to find a way to outperform them? Simple Vonage was competition and these days the knee-jerk reaction is to sue competition. Suing someone into nothingness is not the same as outperforming them.

     

    reply to this | link to this | view in thread ]


Add Your Comment

Have a Techdirt Account? Sign in now. Want one? Register here
Get Techdirt’s Daily Email
Save me a cookie
  • Note: A CRLF will be replaced by a break tag (<br>), all other allowable HTML will remain intact
  • Allowed HTML Tags: <b> <i> <a> <em> <br> <strong> <blockquote> <hr> <tt>
Follow Techdirt
A word from our sponsors...
Essential Reading
Techdirt Reading List
Techdirt Insider Chat
A word from our sponsors...
Recent Stories
A word from our sponsors...

Close

Email This