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Sprint Finds Cash in Patent Filings

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Like finding a $20 bill in your coat pocket at the beginning of winter, Sprint has “found” a potential source of revenue in its patent portfolio. While it will certainly be harder than reaching into a coat pocket, the beleaguered wireless carrier probably sees patent litigation as easier than its corporate turnaround.

After squeezing $80 million out of Vonage last year, Sprint has apparently decided that its 115 “voice over packet” patents might be its next cash cow. The carrier says it will sue four smaller phone companies — NuVox Communications, Broadvox Holdings, Big River Telephone Co. and Paetec Communications — for violating six of its patents associated with delivering voice over a data network. It is seeking damages and an injunction. Interestingly, the carrier didn’t try to negotiate with the providers before dropping the L-bomb on them. All of the carriers said they were reviewing the lawsuit and couldn’t comment at this time.

Considering that these six patents have been tried in the courts thanks to Vonage, Sprint is in a much stronger position when it comes to getting a licensing deal, which makes the fact that Sprint chose to go with a lawsuit interesting. It’s likely that when presented with the patent violations and a reasonable license fee, the companies could reach some common ground. Another VoIP company, VoiceGlo, was sued in 2005 along with Vonage, and negotiated an undisclosed license with Sprint covering its use of the patents.

That means Sprint is either going for the injunction (to shut down its competitors), or it is taking them to court in an effort to weaken them (by way of scoring a larger financial settlement). Either way, Sprint is playing hardball — and it isn’t alone.

After successfully coaxing a $120 million settlement out of Vonage last year, Verizon Communications is also asserting its VoIP patents against a competitor. Earlier this month, Verizon sued cable operator Cox Communications for infringing eight patents. Two of those patents are the same ones Verizon successfully defended against Vonage. Vonage may have had to pay millions, but it looks like the power its loss gives the incumbents might keep independent VoIP players paying for years.

13 Responses to “Sprint Finds Cash in Patent Filings”

  1. I don’t understand why Sprint (with Verizon lurking in the shadows as well) is suing these three providers. Level3, Global Crossing, Qwest, XO and many other much larger providers use the exact same technology. Is Sprint just being a bully and picking on the little guy?

  2. @tc1uscg

    Either you must work for sprint or are on their legal team.

    Comparing patents that sprint never developed into any useful products to car designs that everybody can see is stretching reality a bit, dont you think?

    Secondly, assuming that voip companies “copied” sprint’s patents implies either they had direct access from sprint to whatever engineering solutions the patents covered or they went through the patent information system to see what they could use. As far as I am aware, they might have developed these solutions independently but because sprints patent application predated their development, their hands are tied.

    The are of IP is a controversial one, think of “patenting one click buying”, and many people are in agreement that it should be overhauled, especially from the open source community.

    Moves like these, like that of microsoft and SCO, signify a company that is in the throes of death.

  3. It seems a little odd that Sprint wouldn’t at least attempt to send a few letters first to try to reach a licensing deal.

    The reason for going after the smaller companies first is to build up a list of companies that license their patents and then work their way upstream to the bigger companies. There are two driving thoughts behind this strategy: (1) the more companies that are licensed, the more likely other companies may fall into line (check out how the Lemelson bar code reader patents were licensed out) and (2) the smaller companies are less likely to have the financial resources (figure $3-5 million at a minimum) to challenge any of the patents (plus, if the same patents which have already been upheld as valid by a court are being asserted, it’s less likely that they would be overturned short of finding new references to invalidate them).

    Standard disclaimer: This is not legal advice (though I’m a patent attorney), reading this won’t make you smarter or better looking, and objects in mirror are closer than they appear.

  4. Hmmm, so what. These people can’t just use something that doesn’t belong to’em. As far as Sprint seeing them as a cash cow? Get real. Should they just sit back and let it slide? No. As far as getting ride of a competitor? Since when did Sprint sell VoIP? They provide back bone services for other VoIP providers but they are not in that mind set. If they are.. please point me to where I can sign up. Do you think that if some little backyard automobile maker started making cars using Fords, Toyotas and/or KIA’s ideas, they would be allowed to do so. What planet are you from again?

  5. Hmmm, why don’t any of these big telcos sue the other big telcos who have VoIP? Oh yeah, because they had enough money to file their own patents too.

    It’s easy to gang up on the little guys and push them out of business, but these big telcos won’t go after each other.