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March 12, 2007
Verizon vs. Vonage
At the present time, Verizon has won a court decision regarding its patents around Voice over IP. In a few weeks, Verizon and Vonage will appear before a judge to decide if an injunction should be enacted to have Vonage either develop work arounds or provide compensation for the use of these patents. The patents themselves look like they could be applied to many other service providers. It is unclear that Vonage had time to manage a strong defense and fully investigate the issues of prior art.
In theory, the interpretation of these patents is broad enough as to impact the cable operators who are offering triple play services and a variety of product companies including Cisco, F5 and Neustar. Speaking to potential expert witnesses, the concern about patent protection has rendered even the most vocal proponents of VoIP silent. The silence has highlighted the injunction hearing and seems to indicate that Vonage is not finding many allies.
Testifying in their series of mergers, Verizon and at&t both promised to support the development of a competitive environment. The BellSouth & at&t merger specifically promised to use VoIP to compete outside of its territory. This promise maybe in jeopardy given this decision, and it maybe that they would use their cellular network as the alternative service. However, IP Multimedia Subsystems maybe subject to Verizon’s patent as well.
But perhaps the lack of allies indicates the bigger problem. Going on the US Patent and Trademark Office website a variety of searches revealed the following.
Alcatel - Lucent, at&t, Telcordia Technologies, Qwest and Verizon probably represent over 20,000 patents, while Cisco, IBM, Microsoft and Sun Microsystems represent over 200,000 patents. The convergence of data, voice and video may ultimately put verizon on the wrong side of this argument. As the terminology between these worlds converge, it maybe that the computing industry is the ultimate winner.
For the near term, the injunction hearing is the critical path, but Verizon’s claim that it is to early to determine what will they will do will not be acceptable if the injunction forces competition out of the market. In the past, Verizon had subcontracted VoIP Service Providers to provide white label services on their behalf. I would speculate that no documentation exists assigning patent use to those companies. In licensing the technology to Vonage, a competitive catch 22 problem occurs. The price is raised to support the legacy provider, who had R&D specifically to lower prices for the public. As Verizon said in it’s press release, “"Patents encourage and protect innovations that benefit consumers, create jobs and keep the economy growing.” At the injunction hearing that should be the goal.
Posted by carl at March 12, 2007 06:43 PM