Vonage Settles Verizon Patent Dispute; Next Up: AT&T

from the cheaper-to-settle-than-to-fight dept

Just a couple weeks ago, we noted that Vonage appeared to be settling all its patent disputes -- with the one exception being Verizon. Well, you can cross that one off the list as well, as Vonage is paying $120 million to Verizon to settle its patent dispute. This is something of a joke. There's been plenty of prior art discovered on Verizon's patents -- and it was quite clear that Vonage didn't take this idea from Verizon at all. In fact, Vonage had been the innovator. The first company that was able to take all of these ideas and package them up in a way that customers actually wanted. Verizon, on the other hand, came to market well after Vonage was already gobbling up marketshare and did a terrible job marketing its product, which failed to generate much interest. So, after losing in the marketplace, Verizon simply sued the company that did a better job. That's not the sort of activity the patent system is designed to encourage. However, Vonage so far had trouble proving its case in court, and it's become clear that Vonage's investors wanted the lawsuits off the decks (perhaps to facilitate a sale), so Vonage is settling as fast as it can. In fact, as soon as news broke that this lawsuit was settled, the stock popped -- so you could say that investors are helping to pay the settlement. Of course, when you're just handing out money for bad patents like that, it should come as little surprise that others are rushing to join the party. Witness AT&T's decision to sue Vonage for patent infringement just last week. Anyone else have a vague, overly broad and obvious patent on VoIP that can be used to squeeze some free money out of Vonage? Now's the time...
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Filed Under: patents
Companies: at&t, verizon, vonage


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  1. icon
    Mike (profile), 26 Oct 2007 @ 12:02pm

    Re: Re: Re: TechDirt spews more nonsense

    Wilton,

    I'm talking about innovation from the economics standpoint, where innovation is clearly defined as successfully bringing something to market.

    You can argue *semantics* all you'd like, but the key point is what's more important to the overall economy? It's bringing a product successfully to market. The goal of the patent system is to encourage exactly that. The entire reason for the patent system is that it's an upfront *cost* that is designed to bring better results to the wider economy.

    Who did that? Who brought the product out and made it useful and worth paying for? Not Verizon. Not Sprint. Not AT&T. Vonage did. They're the innovators here, whether you like it or not.

    You trash it as just "marketing," but go back and look at almost any successful technology. The key to its success wasn't its "newness" but the ability to get it out to people properly. It's always about the marketing. Thomas Edison wasn't a great inventor, he was a great marketer. Same with Henry Ford. They're innovators. Not because they did something new. But because they were able to take something that others were working on and bring them to market much more successfully in a way that had a real economic impact.

    That's what the patent system is designed to encourage, and it's clearly not what is happening in this space. The *losers* who were unable to bring their product to market successfully are suing those who could.

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