Vonage Hit With $69.5M Judgement

andy1307 writes "The Washington Post is reporting that Net telephone company Vonage Holdings Corp. was ordered in federal court Tuesday to pay Sprint Nextel $69.5 million in damages for infringing on six telecommunications patents owned by competitor Sprint Nextel Corp. In addition to the damages, jurors awarded Sprint Nextel a 5 percent royalty from Vonage on future revenues. It was the second verdict against Vonage this year. A jury in Virginia determined in March that Vonage had violated three Verizon patents in building its Internet phone system. The jury awarded Verizon $58 million in damages plus 5.5 percent royalties on future revenues. Greg Gorbatenko, a telecommunications and media analyst for Jackson Securities, said the decision 'feels like a death knell' for Vonage because future revenue will likely dry up, preventing the company from investing in better technology or improving customer service."

Comments

Damn...

[Cervantes]

Damn, I wish I'd remembered to patent "connecting phone calls over the internet" when I thought about it... oh, the first time I saw a microphone attached to a PC.
Seriously, 8 random people who aren't smart enough to get out of jury duty are considered smart enough to understand the fine points of patent law and internet telephony? And this is enough to cripple a (relatively) small startup company? Can someone remind me what Sprint/Nextel did with these oh-so-valuable patents, and what Vonage did that cost them tens of millions of dollars? Besides not paying sprint tens of millions of dollars, that is.

Re:Damn...

[Anonymous Coward]

Well, speaking for myself, I flipped the telcos the bird (as hard as I could) and gave my dollars to Vonage instead for the past 3 years. Multiply that by however many other people who did the same, and it adds up to something.

The most disgusting part of all of this is that the telcos let the little guys take all the risks, prove and market the technology to the public, and show that there is a viable market for VoIP phone service. They they realized that they could squeeze more money out of consumers than Vonage et.al. were, but the only way to do that was put them out of business. I can't help but wonder if this is what our Founding Fathers(TM) had in mind when they envisioned the patent system.

Perhaps the most disheartening thing though, is the question: How many of the violated patents held by Sprint/Verizon are being infringed by the other under the blessing of cross licensing? I'd bet a big bag of money it's greater than zero.

Re:Damn...

[Adambomb]

who aren't smart enough to get out of jury duty Now if only we were all smart enough to realize that this might be a source of our problems.

Re:Investing in better technology?

[greenbird]

I'm not sure what their long-term plan is. Simply bridging between the Internet and POTS can't be all that hard.

It is when the only way you can implement it is with the approval of and huge payoffs to the industry oligarchs that currently control telecommunications and who's market VoIP is undermining.

Re:Absurd

[Adambomb]

To the fellow who points out that people who are too dumb to get out of jury duty are put in charge of million dollar technical decisions which they cannot possibly understand.... yes. You are 100% correct and you make an excellent post. Seriously though, why would ANYONE consider it smart to get out of jury duty when the decisions of the juries impacts case law like no other. Why is "Getting out of jury duty" considered smart? Yes, it is a hassle and there are opportunity costs involved, but think of the cost of ALL JURIES BEING RETARDED.

In fact, i think we may be seeing that cost all over the friggan place at the moment.

Patents working as the corporations want

[Whuffo]

Here's another example of what's wrong in this country. Patents, which were intended to increase innovation and development have been bent into a weapon that corporations can use to destroy any new competition.

We've got patents being issued on obvious / unpatentable ideas and they're being upheld by courts that appear to be working for the big corporations - maybe the judges are clueless or overworked, but decisions like this one don't make the legal system look good.

Jointly, the current giant telecom companies hold patents on everything up to and including transmitting a voice over a wire. Any inventor that comes up with a better or cheaper way to provide voice telephony service will receive the same treatment that Vonage did.

How times change...

[ehinojosa]

It's really kind of ironic. Verizon bought out MCI, which was one of the first long distance companies that was able to circumvent the AT&T regulated monopoly. Their microwave towers were disrupting the existing market forces in much the same way that Vonage and VoIP in general has the potential to be. Now a company that only managed to get its start by being basically "a law firm with an antenna on the roof" is essentially using their army of lawyers to keep down their potential competitors.

Funny how that works.

Re:A perfect example of patents destroying innovat

[jelton]

This is a perfect example of how bad patent laws and poor bureaucratic administartion utterly destroy innovation.

Fixed for you.

Re:Interesting contradiction

[Dun Malg]

Why would it be working on work-arounds for patents that it is not infringing?
Because it doesn't matter what Vonage thinks, nor what we think, nor what Mrs. O'Leary's cow thinks, but what the most skillful lawyer in the courtroom can make the sub-90 IQ jurors think.