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Summary:

The telecom death match between Vonage (VG) and Verizon (VZ) is being played on in a small arena enclosed by a mesh wire of patents. And things could get quite bloody in months to come. Ed Pennington, head of patent practice for Bingham McCutchen, a Washington […]

The telecom death match between Vonage (VG) and Verizon (VZ) is being played on in a small arena enclosed by a mesh wire of patents. And things could get quite bloody in months to come. Ed Pennington, head of patent practice for Bingham McCutchen, a Washington DC law firm told Telephony that a whole bunch of patent trolls could be waiting to pounce as a result of the Verizon-Vonage decision.

Verizon recently won the $58 million lawsuit, giving hopes to all patent holders, each looking to some get their piece of the action. Verizon, which has won its patent infringement case against Vonage could be emboldened by its win, and go after other players including cable companies and other small VoIP providers. Business Week estimates that there are about 2,000 VoIP-related patents have been issued to a diverse group of companies.

Some of the companies with big patent portfolios include Sprint, Net2Phone and a little known company called Web Technology. Incidentally, Web Technology last week filed a law suit against Verizon, Vonage, AT&T, Earthlink and SunRocket. Tech giants Cisco, Motorola, and Broadcom also have their own patents related to VoIP.

“You will see more companies exiting the business,” David McClure, president and CEO of the US Internet Industry Association recently told Business Week. Now that’s a novel way of precipitating a shakeout!

Previously on GigaOM

  • 3/26/2007: Vonage ready to rumble
  • 3/23/2007: Vonage has 2 weeks to stop using Verizon patents, says Judge
  • 3/16/2007: Vonage – rocky road, not road kill
  • 3/8/2007: Vonage owes $58 million in patent case
  • 2/15/2007: Vonage growth slows in Q4
  • 1/22/2007: Vonage’s tough road ahead.
  1. [...] post by Om Malik and software by Elliott [...]

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  2. Wow…2,000…even more patents than I would have thought…meaning that; since Vonage was so “late” to the VoIP space; that if Verizon doesn’t kill them off with their IP, it’s virtually assured that one or more other patent holders will…

    …assuming of course that they get to their liquid assets before Vonage’s failure-destined biz model burns all the case up in the next few years.

    Anyone even thinking of entering–or financing–VoIP startups would be advised to pay close attention to the existing IP landscape…too many landmines to make it worthwhile.

    But rather than (mis)label those smart enough to come up with valuable and worthwhile inventions as “patent trolls” should they dare attempt to assert their well-deserved rights (assuming of course their innovation really was an innovation–which is of course often not the case); wouldn’t it be more fair–and appropriate–to call those who attempt to abscond with such IP assets what they really are: Innovation robbers?

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  3. …sorry; case=cash

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  4. If anyone thinks that a VoIP start-up would be a good idea, they are just nuts. It really has nothing to do with IP though. Voice is a commodity, it doesn’t change the game, it just is a different way of delivering phone service. Voice is trending to zero. Who would really think its a good idea to build a company around a product that has strong competitors with big bank accounts? Why is it a good business model to set out to attain razor thin margins?

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  5. Trouble at Sunrocket? You bet! After about 3 months of so-so service, I made the terrible mistake of trying to add a third line and gizmo. Their world exploded! Their techs haved me so mis-wired that it will take them up to 2 weeks to straighten it out.
    meantime I’ve NO PHONE SERVICE. What sort of a company can calmly tell you your out of phone service for 2 weeks, and then stop comunicating with you? Meanwhile, the CEO is in hiding without access by phone, email, or snail-mail. This company is inept, and I suspect close to closing…

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  6. Patricia Dalyander Friday, April 6, 2007

    If Sunrocket is close to closing, it hasn’t shown any signs of it in my service. It’s been rock solid for close to two years, and the couple of problems I had setting up my system were quickly handled by customer service. It’s going to make me awfully sad if this patent mess means I have to go back to shelling out big $$ to the phone or cable company who only want to give you any kind of a break on any service if you buy all their services.

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  7. Sarah Norton Monday, April 9, 2007

    I’m with you, Patricia; SunRocket provides a great product at little cost. I would be very unhappy to have to crawl back to Verizon!

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  8. Tom Christner Monday, April 9, 2007

    I am happy with my Sunrocket service. The tech support team seems solid. I am going month to month until this mess shakes out.

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  9. “You will see more companies exiting the business,” David McClure, president and CEO of the US Internet Industry Association recently told Business Week.

    It’s always enlightening to find articles quoting Dave McClure. At least he stopped calling it an ISP association, since it is really just Verizon astroturf. Now, Dave will deny it, but every position USIIA takes is pro-RBOC and anti-independent. And VZ is still listed as a board member.

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  10. Hi : I think Sun Rocket offers great service and it will be a pity if they close shop

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