Vonage Barred From Using Verizon VoIP Patents

thefiremonk writes "Bloomberg reports that U.S. District Judge Claude Hilton has issued a permanent injunction against Vonage. The goal: to stop allowing customers to make calls to standard phone lines. 'U.S. District Judge Claude Hilton approved Verizon's request for a block today in Alexandria, Virginia. Hilton said he won't sign the order before a hearing in two weeks on Vonage's request for a stay. A jury found March 8 that Vonage infringed three patents and should pay Verizon $58 million.' Does this spell doom for the already troubled Vonage? "

Comments

So Much For Customer Service

[phinsxiii]

Once again Big Business wins and the customer get screwed.


Isn't Democracy wonderful?

:)

Re:So Much For Customer Service

[phinsxiii]

Really?

What about the Billions of taxpayer dollars that the Bells received in the 90s to upgrade the infrastructure that they still haven't halfway finished? You remember fast access to every doorstep? Well that has only turned out to be limited to major metropolitan areas. I still can only get fast access to my doorstep through my cable company. Bellsouth has yet to provide DSL, and I live in a fairly large city.

No. This is pure greed. Vonage forced the Bells to reduce their pricing before they were ready to compete, so Verizon is just going to sue Vonage out of existence. Vonage was already in dire straits. They will not survive this legal battle and that is what the Bells wanted.

The Bells do have a right to make a profit, but not at the expense of the customer.

Re:So Much For Customer Service

[antarctican]

It is yet again another perfect example of how patents actually hinder innovation rather than spur it. A sad day.

I haven't been following this but I'm not curious to dig deeper to see what exactly these patents are. As in, is it as simple as a patent on network->land line calls? And if so, that's not only an overly broad patent, but could mean the doom for the entire coip industry. Or even open source projects such as Asterisk. I certainly hope this patent turns out to be some very specific technology, otherwise a booming and very useful technology will suddenly have the door slammed in it's face.

I guess that will be the question, is it a patent on a technology or... *shudder* an idea for a technology. An actual method for doing something should be patentable, but an idea like, "what if we hook a network to a phone line" should most certainly not be. And I would think there is prior art if the latter turns out to be the case.

Re:So Much For Customer Service

[URSpider]

Really?

Does Verizon pay every ma and pa phone shop who's lines they use passing Cell Calls to land lines?

I highly doubt it.

Why do you doubt it? Of course they pay them. Check out this recent story on a company that was making millions off of these payments by redirecting incoming calls back out over VoIP, basically a form of bit-laundering.

And, it's "whose," not "who's."

Re:So Much For Customer Service

[don_bear_wilkinson]

[begin quote]
No. This is pure greed. Vonage forced the Bells to reduce their pricing before they were ready to compete, so Verizon is just going to sue Vonage out of existence. Vonage was already in dire straits. They will not survive this legal battle and that is what the Bells wanted.

The Bells do have a right to make a profit, but not at the expense of the customer.
[end quote]

Believe me, I am NOT a fan of greed. I HATE it, from deep in my heart. I honestly and passionately believe greed is the root of all evil. Not from some religious dogma, from observation of human life around me.

That said, I think you are flat out wrong. It is not greed to;

1) want to make a fair return on your costs/investments
2) want to be paid for use of your infrastructure
3) want to make enough profits to repay investors, fund research, etc.
4) want to compete on a level playing field.

If Vonage "stole" or cheated to make it possible to force pricing (artificially) to a level that Vonage can't compete with, then they have to fight that and protect themselves. That's not evil greed, that's trying to get rid of an unfair cheat.

I think there's a bunch of bullshit and silliness with IP and patent laws, and the whole system is both broken at it's roots and being abused and misused daily, but cheating is cheating.

Lastly, you need to get over this idea that all that matters is what benefits you^H^H^H the Customer. Just because someone can come up with a way to give you something that you want for less money does not justify any and all means.

Re:So Much For Customer Service

[dgatwood]

How do you steal something that is nothing more than the IP equivalent of what HAM operators have been doing for decades? It's just a simple medium change, same as any other medium change. The fact that Verizon was able to get a patent on such a breathtakingly obvious thing is appalling, and the fact that the patent was upheld, triply so. It is a completely obvious extension of something that has been done for many, many, many years. Hell, I seem to recall computer modems that could be adapted to do this sort of thing back in the 80s.

The fact is that this is just the old school telephone industry using lawsuits to protect their obsolete business practices and try to mask the fact that they've been charging line switching rates for packet switching long distance service for two decades. Verizon deserves to get their asses handed to them, and if Vonage is going to go under, it is the responsibility of other VoIP providers to prop them up so that they can continue this fight, for if it is settled in Verizon's favor, it will decimate the VoIP industry.

Either way, screw Verizon. Long distance communication is what video chat services are for, and they don't cost anything, unlike VoIP. I don't remember the last time I used a landline telephone regularly, VoIP or otherwise. Even VoIP is too expensive for what they actually provide. :-)

Re:So Much For Customer Service

[mabhatter654]

but Vonage does pay for the lines. They pay to have "phone lines" to the demux box that down coverts from the network to phone company lines to make the calls. As well as for the network bandwidth they use.. fat pipes 24x7 cost thousands of dollars a month. The joke of the whole thing is that they are most likely using off-the-shelf phone company equipment turned around backwards... instead of binding 2-3 T1 INTO their company they are sending the phone calls back OUT in the proper format.... It's genius.

I find patent infringement hard to swallow though. This is all off-the-shelf equipment, the patents should have been paid for with the equipment purchase.. so maybe it's a software patent on moving the data type "phone call" from an internal network to the phone company network. Either way, the Phone company and equipment maker has been well paid... and they've found a technicality to sue on.

As far as the phone company not getting their "fair share", realize in most cases a phone call is only a 28.8k stream for them... and they pay "long distance" over the same pipes we use the internet for.... in other words typical long distance calling is ALREADY VOIP and customers are being raped for cost of voice (28.8k * $.15/min) compared to data (1Mb/S for $39/month). Phone companies need to adjust their models to better reflect the cost structure... perhaps we should pay more for the higher speeds (6mb) but less for basic (768k) and do away with POTS altogether.. it's a quick change of boxes at your house for most people.

well

[mastershake_phd]

They better come up with a none-infringing way to send calls from the internet to a phone line. Maybe a speaker a phone and some duct tape?

Yet another reason for patent reform

[Overzeetop]

Actually, it's this kind of patent use (abuse) - restraint of trade - that should be forbidden. It should be prevented becuase of the monopoly and incumbent carrier status that Verizon holds on the wired telephone market.

They are not using the patents to forward the condition of man, but rather to choke off a competitor in an estabilshed industry with an (effectively) insurmountable cost of entry using traditional methods.

It's no surprise that Verizon is one of the top ten hated corporations.

Re:Yet another reason for patent reform

[operagost]

They are not using the patents to forward the condition of man

That's not the purpose of patents. Patents are used to encourage invention by limiting the ability of others to copy the inventor's work during a limited period.

Re:Yet another reason for patent reform

[Kenja]

OK.... so how big (in your opinion) does a company have to be before they should be forced to give away their research and Ip to competing companies?

Not saying I agree with the situation, but the problem is not Verizon enforcing their patents but the patent process itself.

Re:Yet another reason for patent reform

[Cerebus]

Which part of "To promote the progress of science and useful arts" is unclear?

Re:Yet another reason for patent reform

[Overzeetop]

What part of "Permanent Injunction" don't you understand?

Re:Yet another reason for patent reform

[PPH]

That's not the purpose of patents. Patents are used to encourage invention by limiting the ability of others to copy the inventor's work during a limited period.

Exactly. That's the problem with patents as currently implemented. The US Constitution empowers Congress:

To promote the Progress of Science and useful Arts, by securing for limited
Times to Authors and Inventors the exclusive Right to their respective
Writings and Discoveries;

So the exclusive rights granted to authors and inventors is subject to their furthering the progress of science and the useful arts. If an inventor patents something and then sits on the patent, it should be revoked. I think inventors should be required to demonstrate this promotion of progress by either building something or licensing the patent.

Juries

[morgan_greywolf]

This is what happens when you have technical cases decided by 12 ordinary citizens too stupid to get out of jury duty. It's why IBM doesn't want the SCO case to go to trial without a finding from the judge that it didn't infringe on any of SCO's copyrights. (If the summary judgement is granted and it does go to trial, the jury has to proceed on the idea that IBM hasn't violated any of SCO's IP.)

Verizon is just suing to keep Vonage -- and every other company offering a similar service -- from making it irrelevant in the home phone market. Which is exactly what's happening.

Re:Juries

[operagost]

This is what happens when you have technical cases decided by 12 ordinary citizens too stupid to get out of jury duty.

I'm with you, dude. Voting is stupid too! Look at those idiots standing in line on election day! Better off playing WoW.

anyone have a link with some actual meat?

[drinkypoo]

Like, for example, the patents being infringed?

"One smart decision among many, many stupid ones."

[mmell]

I thought that was just Vonage's marketing hype, not their business model!

Yep.

[russotto]

If the order isn't stayed pending appeal, Vonage is dead; revenue drops to zero nearly overnight. So are all other independent VoIP providers, when Verizon gets around to crushing them.

A concrete manifestation of a patent system out of control.

Hopefully they are forced out of business

[mulvane]

Down with Vonage!! I had the service for 11 months. First 3 months was great, but then nothing but trouble after I deployed to the Gulf for 6 months. My wife tried to call them repeatedly to have it fixed and they kept blaming my ISP which after I got home I ruled out as it happened on my COMCAST, neighbors ATT, and Clearwire in local area. I could see one ISP being the problem, but not 3, and after I called again they said I wasn't qualified to make such assumptions. Funny, I can sure manage to make UHF/VHF, and SAT links and manage the LAN on a US Guided Missile Cruiser, but I wasn't technically smart enough to call the bullshit flag on the blame they focused on my ISP. Further, when the 10 month mark rolled around, I had military orders requiring me to move and at the time it was to a place I wouldn't have broadband, or hell, access at all, and they tried to pressure me into keeping the service and singing another year anyway. They just didn't get the fact that small islands sometimes don't have access. Then, they argued with me about how I owed them an early cancellation fee even though I was also canceling due to shitty service THEY couldn't fix. I had to end up also telling them a lie that I was not married, and I had no family who could make use of the account before they would close it. I had read horror stories at the time about people who had went over the 12 month period already and Vonage had refused to cancel the account, or had verbally said they would and the charges kept coming. I feared this so I even canceled the card. And low and behold, I started getting statements from my bank who issued a new card telling me about the activity that they were refusing.

Re:Hopefully they are forced out of business

[dattaway]

For me, Vonage had a good service, but they were too aggressive. I also had a well documented case against Vonage. Their service was good in my case, but cancelling was a problem that lasted a year. I quickly learned their customer service were script junkies who didn't have an option for "cancel." I may have been a test case for them to see how far people would take it. I ended up giving my card company a statement and a dispute. Then I called Vonage once again and it got into a long shouting match with many people. One of their representatives made a big mistake. She mentioned a fact I stated "wasn't in the notes." That's when I demanded my request to be cancelled by included (they apparently never had a request from me documented yet.) I kept referring to their notes after that. Finally, I got to get into an assertive discussion with one of their guys who was well versed in procedure. He reluctantly refunded my money for the year of service I didn't use. I gave them my new credit card account and gave my card company an updated statement. In the next few months, Vonage credited my account numerous times. I'm not sure they knew what they were doing. No copies of their notes were ever copied for my records, even though I demanded it numerous times.

A person almost needs a lawyer to cancel from Vonage these days. Apparently, dealing with ANY telephone provider is getting this bad. There needs to be some laws to protect the consumer, otherwise the telephone industry may lose trust.

Re:Hopefully they are forced out of business

[dAzED1]

I had great service, worked well when my net connection worked (and my net connection was indeed flaky), but I still canceled after a month and a half for various complicated reasons. They happily canceled, told me to keep the router, and said if I changed my mind to give them a call again. Was absolutely painless.

My (true) anecdotal story conflicts with yours. Neither shows a trend.

Re:If Not Vonage, Then Who?

[jtn]

You realize, of course, if Vonage is unsuccessful in having a stay granted and cannot develop a technical work around and thus departs from the marketplace, Verizon will become emboldened to press lawsuits against other voice providers using VoIP-to-PSTN gateway technologies? Goodbye Packet8, goodbye Broadvoice, goodbye VoicePulse...

It would seem the only solution in the end is to entirely bypass the legacy PSTN system and encourage the people you call to switch to a VoIP solution so no calls are terminated by Verizon.

These patents can't be valid

[spectro]

"A method of translating calls between the Internet and standard phones, call-waiting features and wireless handsets"

- So they have a patent on transcoding from/to VoIP?, there's got to be some prior art on that
- Call waiting?... are you kidding me?
- Wireless handsets?, how does vonage infringe that?, VoIP got nothing to do with wireless handsets.

Vonage needs to hire themselves some real lawyers, Boies seems pretty good at dragging lawsuits forever.

Re:These patents can't be valid

[russotto]

Remember, for the purpose of demonstrating prior art, the prior art has to be pretty much exactly the patented invention. However, for the purpose of demonstrating infringement, the alleged infringer's product just has to be close. This is a ridiculous state of affairs.

Skype

[rebmemeR]

How could this affect Skype?

Vonage's official response

[rGauntlet]

Via a Press Release on their site: http://pr.vonage.com/releasedetail.cfm?ReleaseID=2 35198

One interesting tidbit:

"We are confident Vonage customers will not experience service interruptions or other changes as a result of this litigation," said Mike Snyder, Vonage's chief executive officer.
.
.
"Our appeal centers on erroneous patent claim construction, and we remain confident that Vonage has not infringed on any of Verizon's patents - a position we will continue to vigorously assert in federal appeals court," said Sharon O'Leary, Vonage's executive vice president, chief legal officer and secretary. "Vonage relied on open-standard, off-the-shelf technology when developing its service. In fact, evidence introduced in court failed to prove that Vonage relied on Verizon's VoIP technology, and instead showed that in 2003 Verizon began exploring ways to copy Vonage's technology," she added.

Is the injunction legal?

[RingDev]

Seeing as how Vonage is required by law to connect callers to traditional 911 call centers (over standard phone copper) is the injunction, baring Vanage from connecting VoIP calls to POTS calls legal if it prevents those calls?

-Rick

Re:Is the injunction legal?

[cdrudge]

There are many technical details why I think the injunction was granted but a stay will also be issued. You point out one very good one just because millions currently use VoIP. There also would be catastrophic damage done to Vonage if the stay was granted but minimal damage to Verizon (and what damage could be recouped) if the stay was granted but later lifted.

I think you're at fault here.

[raehl]

You must have called the AOL customer service line by mistake.

Re:If Not Vonage, Then Who?

[wizbit]

I have Vonage, and this story obviously worries me quite a bit. But your point about Verizon misses the mark for its other services - Verizon are also providing competition in other areas (eg, cable TV). Comcast is the undisputed king in my area (Philly) but I am seriously considering switching to Verizon's TV service after seeing their lineup and pricing. Not to mention, I don't have many options here (no view of the southern sky = no satellite TV) and I'm tired of giving my money to the local monopoly - on TV, at least. But I agree in principle that this kind of anticompetitive behavior really doesn't serve anyone, and it's yet another example of patent law abuse that screws the average consumer.

Aren't all?

[lenne]

Aren't all voip companies doing more or less the same?

How many ways are there to connect voip to pstn?

Leif

Re:What's the infringement?

[interiot]

Here's the original 7 patents... #6,430,275, #6,137,869, #6,104,711, #6,282,574, #6,128,304, #6,298,062, and #6,359,880.

It sounds like #6,430,275 (tiff, pdf, text/png) is the one that's the VOIP/POTS bit.

Just a thought

[Cauchy]

Have any of us bothered to look at the patents? Are they good and valid? Did Verizon truly invent something, and thus, perhaps, because of their investment, deserve some level of protection against theft in exchange for them contributing to the overall body of knowledge? Perhaps these patents are bogus, but I haven't seen anyone in this discussion yet attack Verizon/the PTO on the merits of the patents.

I agree that the patent system is broken, but, as I've said before, patents are more important to the little guy than the big guy. Without patents, if I as a little person invent something, there is nothing to stop Microsoft or IBM or some GE from copying my invention. Then, it just becomes a matter of who can out market who, and the little guy will lose this battle.

Re:Just a thought

[DogDude]

Have any of us bothered to look at the patents? Are they good and valid? Did Verizon truly invent something, and thus, perhaps, because of their investment, deserve some level of protection against theft in exchange for them contributing to the overall body of knowledge? Perhaps these patents are bogus, but I haven't seen anyone in this discussion yet attack Verizon/the PTO on the merits of the patents.

By "us", do you mean the kids and geeks who read Slashdot, as opposed to the professional patent attorneys that work for Verizon and Vonage? Do you really think that it matters what a bunch of unqualified regular people who happen to read a geek blog think?

I'm still hedging my bets

[ElForesto]

And this press release is NOT going to keep me from looking at transferring my phone service Real Soon Now(TM) to another provider. As much as I like Vonage, I'm not going to ride this roller coaster of not knowing if or when my phone service will go off thanks to a company I've never done business with.

Patent 6430275

[Dan Stephans II]

I quickly read through the patent that appears to be at issue here (6430275) and I don't think it's purely the connection from a VOIP connection to a PSTN/POTS line (although that's covered I don't think it passes muster from a non-obviousness/prior art standpoint). The meat of this patent deals with call tracking and billing (starting at around page 5) and to me it stands out as the most reasonable area to pursue vonage. I could be wrong too. =) Nothing in the application struck me as terribly original.

Considering...

[Svartalf]

...that I've seen the quality of "professional" IP counsel up close, I can tell you that many of them
aren't any better at it than we are, believe it or not. I've got one of the better lawyers in the field
as my patent attorney, and he's razor sharp and what meets your apparent picture of them. The previous
joker, also a lawyer at the Law Firm we retained, heh... Many, VERY many of them only pretend to know
what is and isn't viable or not. If I were Vonage, I'd have fired their litigators and got better ones.

The patents are pretty much rubbish in the first place and were largely rubber-stamped into existence.

Patent reform.... hell, just get rid of patents

[Teancum]

Every time this issue comes up, I have pleaded with nearly everybody to make a clear cut example where patents were actually useful to anybody outside of the legal community.

There is one and only one semi-useful function that patents actually serve: they document the historical development of technology in a systematic fashion. In other words, the USPTO is really a bunch of poorly disguised historians and nothing more.

I have known many individuals who have spent fortunes on developing patents, and I've been on the brunt of supposed patent infringement and having to change my designs explicitly because of either potential or real violations of patents. When the prevailing opinion is that engineers should never actually read the text of anybody else's patents, ever, you wonder what actual value they give in the first place.

I used to think that mechanical patents might have some value (as opposed to software patents that are completely meritless). Certainly classic "inventors" like Thomas Edison did use the power of a patent portfolio to their advantage, but I would argue that he was a very, very, very (I could repeat this a dozen times) very rare exception and is not typical at all. Far more people are like Philo T. Farnsworth who had an incredible idea, but spent not only a fortune trying to get the patent in the first place and to do the original research necessary, but also fought a very long and protracted legal battle with none other than RCA and David Sarnoff. Mr. Farnsworth barely recovered legal fees and other related expenses, and never really got proper royalties for his invention of television. And when he decided to develop his Fusor technology, he once again went down the path of patenting the technology only to find out that it really didn't matter.

Far more people are like my grandfather, who was awarded 11 patents, but the only person who ever made any money off of those inventions was his patent attorney. One of his inventions was a predecessor to optical disc technology and is explicitly mentioned in the CD (redbook) and DVD patent claims. I could name other inventions of his, but frankly nobody would really buy his ideas, because in reality that is not how most companies use patents.

The typical use of a patent is a defense against somebody else trying to claim they have a patent on one of your manufacturing processes or products. You then pull out your patent inventory (assuming you are a large company) that is stocked full of all kinds of juicy stuff, and you then go back after the original party in the suit. Rather than melting down everything and filing hundreds of lawsuits, the two companies who are then holding a knife against each other goes for a "portfolio exchnage" and usually swaps patents between each other in some sort of agreements. Think of what happened last year between Microsoft and Novell, and you get the picture rather clear about what this type of patent exchange is often like.

There is no way that "Guido's 'net startup garage" with two employees and a couple of patents are possibly going to prevail against a large and powerful company... even if you can absolutely prove that you have a very valid patent. It just won't happen, and what is supposed to "promote the useful arts and sciences" does neither. It doesn't even protect small start-up companies with a very good idea from being overwhelmed by major corporations, much less an independent inventor. In short, what good do patents of any kind actually do for anybody other than keep a bunch of lawyers employed?

Re:May? MAY!?!

[drinkypoo]

Yeah, litigation just isn't necessary once we all have VoIP phones. That day is coming, albeit slowly. Sooner or later you'll just access people by DNS, instead of by phone number, making a VoIP call to them via IPv6. The telephone network as you know it is a strictly limited-time affair, and the cellular providers are the most scared because even 3G cellular data is SLOW AS HELL compared to, say, the current generation of DSL hardware, or WiMax, or basically anything else. I mean it's barely faster than satellite and their encapsulation schemes mean that there's often as much latency as satellite! Of course, they'll continue to do their best to litigate competing technologies into oblivion...

Re:What's the infringement?

[Jason Pollock]

If it's 6,430,275, I personally developed the same class of product (PSTN/VoIP gateway with prepaid charging and authentication) in 98/99. We had been doing the same with ISUP and AIN variants even earlier.

It should appear obvious to any telecom's protocol engineer that this is possible. It is even encouraged by the protocols.

For example, INAP (ITU version of AIN in the patent), uses the same call model as ISUP, the circuit control protocol. ISUP and H.323 are both Q.931 protocols, therefore they also share the same call model. That makes it obvious (it was to us), that H.323 can be easily made to trigger an INAP call model. Obviously, the benefit is that this ensures that the applications can run unchanged on both the PSTN and the VoIP networks.

And H.323 has been around for a lot longer than this patent.

Once you understand that H.323 and ISUP are Q.931 variants, you see that all the work done to trigger IN applications on the various country and network ISUP variants is also prior art.

Re:Patent seems too obvious

[lnklnklnk]

Look at the patent date.

The patent was filed by BBN Laboratories (now Verizon Labs), in the mid-to-late 1980s. BBN just never enforced it (or cared to).