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), 25 Oct 2007 @ 11:37pm

    Re: TechDirt spews more nonsense

    1. Once again, Vonage did not innovate. Innovation requires creating something new. Vonage did not do that. All Vonage did was bring VoIP to the market. That's not innovation; that is successful marketting. Vonage should be commended for making VoIP accessible, but they should not be called innovators for the work that they did. It's inappropriate.

    You seem confused about what innovation is. As has been discussed at length many times before, what you described IS innovation. Invention is about creating something new. Innovation is about successfully bringing that new thing to market. Not only that, but studies have shown that it is this act of innovation (successfully bringing something to market) that is what boosts the economy. So we should be cheering on that act. Invention is a part of it, to be sure, but innovation is the key -- and Vonage was exceptionally innovative in bringing their product to market.

    2. You keep citing this prior art that was found on Verizon's patent, and yet that did not invalidate the patent for obviousness at the trial level. Why not? Was the Judge an idiot? Here's a better question: if the patent was so damn obvious, as you seem to claim that it is, then why did Vonage not appeal the district court decision on invalidity? The CAFC never reached an invalidity issue over the patent because Vonage never brought it up on appeal. Don't you find it strange that Vonage never appealed the patent's validity if the patent is as obvious as you say it is? That's tantamount to Vonage saying that the patent was not obvious, even in light of all this prior art that you cite. If the trial court says it's nonobvious, and Vonage's lawyers say it's nonobvious, why are you so damned sure that the patent is obvious?

    I'm sure it's obvious because I can read the damn patent, and I've seen what the real innovators in the VoIP space have said about the patent and it's obviousness. There are plenty of reasons why Vonage chose not to question the validity of the patent -- in large part because it's a loser's game. It's almost impossible to win that game in any reasonable amount of time thanks to the way the courts and the USPTO view the patent system.

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