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The End for Vonage? 296

Posted by Zonk
from the ohhh-they-can't-take-it-there dept.
TheRealSCA writes "The latest in Verizon vs. Vonage is in. The judge has basically stopped Vonage from accepting new customers. From the article: 'A judge issued an injunction Friday that effectively bars Internet phone carrier Vonage from signing up new customers as punishment for infringing on patents held by Verizon. Vonage's lawyers said the compromise injunction posted by U.S District Judge Hilton is almost as devastating as an injunction that would have affected Vonage's 2.2 million existing customers. "It's the difference of cutting off oxygen as opposed to the bullet in the head," Vonage lawyer Roger Warin said.'"
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The End for Vonage?

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  • Yay! (Score:5, Insightful)

    by Mateo_LeFou (859634) on Friday April 06, 2007 @12:10PM (#18636131) Homepage
    Our "intellectual property" system at work for you, ensuring innovation and -- as a nice side effect -- severely restricting competition in the marketplace. Hip Hip Hooray
  • The stage is set (Score:5, Insightful)

    by realmolo (574068) on Friday April 06, 2007 @12:12PM (#18636163)
    Now that Verizon has more-or-less successfully defended their BROAD patents on VoIP stuff, I wonder how long it will be before AT&T/Cingular starts suing ALL of the other phone companies for violating THEIR patents.

    I imagine that AT&T owns MANY of the patents on much of the phone technology currently in use. Or at least, owns patents that are "close enough" to successfully sue everybody for infringement.

    It's all so crazy. The telecom industry in the US is fucked.
  • by dada21 (163177) * <adam.dada@gmail.com> on Friday April 06, 2007 @12:15PM (#18636213) Homepage Journal
    Patent infringement is NEARLY always about one big guy versus another big guy -- or a big guy versus a little guy. How often do patents actually help individuals rather than mega-conglomerates? Even if you have a small business with various patents, can you afford to protect them in court?

    Vonage lived by the sword -- they themeselves believed in patents. While I feel this judgment is counter-market, it doesn't cause as much damage as patents do in general. The idea that someone can monopolize the thoughts, motions or creations of another individual is ridiculous, especially in the multitude of patents we all know are ridiculous.

    So be it. Whenever anyone who uses patents loses a patent war, they get what they deserve. I feel no pain for Vonage, nor anyone who decides to base their businesses on forcing other businesses not to compete in a certain way.

    Rest in pieces, Vonage. Maybe Verizon will be next.
  • Re:Yay! (Score:4, Insightful)

    by norminator (784674) on Friday April 06, 2007 @12:17PM (#18636229)
    Damn.

    I've been enjoying cheap phone service for 18 months now, and hoped it would last a lot longer. If Vonage goes under, and the other VoIP companies face the same patent issues, I may end up having to sign up for Comcast's crappy phone/cable/internet package... increasing my total bill for those services by $10 now, and by another $30 after a year.

    I absolutely refuse to go back to Qwest with their horribly incompetent customer service people (apologies if any of you work there), surprise bonus charges and fees, and the constant attempts to sell you new features you don't need. Thanks a lot Verizon, you really know how to ruin a good thing (and I'm not even in your service area!).
  • Thanks, Verizon... (Score:5, Insightful)

    by keithmo (453716) on Friday April 06, 2007 @12:19PM (#18636269) Homepage
    ...you just made my choice a little easier. I'm a happy Vonage customer, and I'm also in the market for a new cellular provider. I can now scratch Verizon off the short list.
  • by Dunbal (464142) on Friday April 06, 2007 @12:21PM (#18636293)
    I bet they'll do almost anything to keep a customer since they can't add anymore.

          In the US, at least. There's a world-wide market for this kind of thing however. US patent law isn't and can't be enforced everywhere (thank God!).
  • Re:Yay! (Score:3, Insightful)

    by Drakin020 (980931) on Friday April 06, 2007 @12:23PM (#18636345)
    You know why this didn't happen with the blackberry though....All the govt officials and there crackberry phones wouldn't let this happen. But a smaller more useless company like Vonage...Oh yeah throw the book at em!
  • Re:What? (Score:3, Insightful)

    by maxume (22995) on Friday April 06, 2007 @12:25PM (#18636367)
    I think his point was that they don't have any basis to whine about it since they likely would have done the same thing were they in a position to do so.
  • Cisco ? (Score:3, Insightful)

    by terrymr (316118) <terrymr@@@gmail...com> on Friday April 06, 2007 @12:28PM (#18636413)
    So where does this leave you if you're handing off your calls over a PRI using a Cisco router (with h323/MGCP) >
  • by Gordo_1 (256312) on Friday April 06, 2007 @12:29PM (#18636421)

    Vonage lived by the sword -- they themeselves believed in patents.
    Whenever anyone who uses patents loses a patent war, they get what they deserve.
    While you were away living in your patentless fantasy world, real-world business owners who played by the rules, filed patents -- because they had no other choice!

    Don't hate the player, hate the game.
  • by xENoLocO (773565) * on Friday April 06, 2007 @12:31PM (#18636449) Homepage
    I say bring it on. I want patent lawsuits to cripple our entire legal system. I want it to get SO bad that they see what a pile of shit it is and do something about it.
  • by mulvane (692631) on Friday April 06, 2007 @12:31PM (#18636461)
    More than a few years ago, the big AT&T was forced to split up to remove a monopoly they had. Well, lets see, now SBC, Bellsouth, Cingular, DishNetwork and probably more I don't know of all fly under that AT&T banner. All reports of Qwest suck, and I have my own hatred for Vonage but it was a choice some found to be good. Where is all my choice going and why isn't someone in the government stopping this? The telecoms are raping the people AGAIN, and although not a monopoly yet, its getting to the point of being one if not something worse. Now that VoIP is being challenged, that could effectively eliminate even more plays like Charter and Comcast.
  • by Otter (3800) on Friday April 06, 2007 @12:32PM (#18636473) Journal
    Remember when you idiots were convinced that Blackberries were going to disappear?

    Some money will get passed around and this will get settled. Corporations don't just fold up shop so a bunch of Perl chimps can feel more righteous about their silly notions of "innovation".

  • by Hoplite3 (671379) on Friday April 06, 2007 @12:33PM (#18636479)
    I said much the same yesterday about patents.

    Patents are a government granted monopoly (on an idea, in this case) to encourage a certain behavior (inventing). This sort of monopoly has lots of hidden costs for the economy and an unknown benefit for the patent holder. Why not keep everything clear and open? Don't allow the patent. If they idea is really great, it should be easy for the company that that discovered it to dominate the market in the future. Their competitors should take some time to get "me too" products to market, and that time can get them some real dough. If the idea isn't that innovative, it'll be copied easily and won't mean much. This system -- the one without patents -- still rewards people with good ideas.

    This is the Adam Smith warning all over again. Government granted monopolies seem like cheap ways of subsidizing desired activities (research, in this case), but they end up costing a fortune. It's like funding things on bond issuance. The government regularly gives money to the NSF and the NIH because science has a solid track record of providing big returns on the investment, but using patents to cover research is obviously bad, since we're taking a loan instead of buying an investment. Business patents involve the government taking a loan to subsidize business, but without any public discussion about the possible benefits of taking that loan.

    Locking up ideas in patetents is, to me, morally reprehensible too. It inhibits the free flow of ideas by regulating techniques, knowledge, and even the conclusions one can draw from data. I believe that the cost to society of the patent is too high. People invented things before they were granted monopolies, and they will continue to do so after those monopolies are removed. As the pace of innovation accelerates, more people encounter roadblocks caused by this unwise funding. And its exactly that they are paying for the discoveries of a past era through royalties now.

    Intellectual property of all sorts is absurd. The idea could sink our culture.
  • by R2.0 (532027) on Friday April 06, 2007 @12:42PM (#18636613)
    I think that Verizon is going to become a lot more interested in negociating with Vonage after this ruling. Why? Because if Vonage goes bankrupt, Verizon is likely to get squat in bankruptcy court. They don't have a lot of physical assets. They have a customer base - a loyal one. How many Vonage customers, having already switched from an RBOC, are going to switch BACK voluntarily?

    Verizon viewed this as a way to get a piece of a growing market without having to invest anything. tey were going to use the patent to force Vonage to charge a "Verizon Tax" on their customers, which would make the service less attractive to users and maybe send somefolks back to the RBOC's - not to mention the fat licensing fees. But the judge may have killed the goose that lays the golden eggs.
  • by Mean Ass Troll (834934) on Friday April 06, 2007 @12:46PM (#18636669)
    "It's the difference of cutting off oxygen as opposed to the bullet in the head," Vonage lawyer Roger Warin

    cutting off the oxygen supply has long been a term used by management to describe a method of dealing with competition.

    gun to the head references are more often used by unions (buzz hargrove comes to mind)
  • Very worrysome (Score:2, Insightful)

    by alegrepublic (83799) on Friday April 06, 2007 @12:53PM (#18636755)
    This could be not only the end of Vonage, but also the end of Asterisk, Skype and VoIP in general. I am not a Vonage customer and do not plan to be, as I prefer using Asterisk and small termination providers, which is much cheaper than Vonage. However, I think anyone interested in the success of VoIP should help Vonage win this fight, either by contributing money to their defense or protesting the decision to the Government. Letting Verizon get away with it would set us back 20 years or so until the patents expire.

    I also wonder what will happen with all the hardware currently in stores that is set up to connect to Vonage. This may be a nightmare for stores and their unaware customers. I think they judge did not consider all the unintended consequences of his decision.
  • by mungtor (306258) on Friday April 06, 2007 @12:56PM (#18636805)

    If the idea isn't that innovative, it'll be copied easily and won't mean much. This system -- the one without patents -- still rewards people with good ideas.

    You're making the false assumption that innovative == technically difficult. Often it isn't, it's simply a matter of thinking outside the box.

    How technically difficult is it to produce the opener on the top of a modern soda can, especially once you've seen one? Not very. However, as a solution to the problems of pull-tab cans it was a pretty damn clever innovation. There are thousands of examples where people say "I could have thought of that". Well maybe, but they didn't and there is no reason to penalize the people who did since the non-inventors see the system as "unfair".

    The place where the current patent system fails is in the area of process patents. A method of interconnecting any two existing things should not be patentable unless truly new technology was invented to accomplish the purpose. The same with tacking "on the internet" to any existing process (eg One-Click). However, an infinitely variable valve timing assembly for automotive use... at least a "maybe".

  • by nightsweat (604367) on Friday April 06, 2007 @01:05PM (#18636975)
    Remember, AT&T isn't AT&T of old. I don't know for certain, but I'd guess a lot of the old AT&T intellectual property is shared by the RBOC descendents like USWest er, Qwest, PacBell -er AT&T, Nynex -er Verizon, Bell Atlantic -er Verizon, Bell South -er AT&T, Ameritech -er AT&T, and Southwestern Bell -er AT&T.

    Hmm. Maybe they ARE the AT&T of old.
  • by cdrguru (88047) on Friday April 06, 2007 @01:07PM (#18636989) Homepage
    Let's see, Vonage builds ... nothing and sells little boxes to people to connect to their Internet connection. This then connects to a couple of termination sites that either connect to other Vonage customers (maybe) or just dumps the call out on the standard telephone network.

    Yes, individual calls out cost them something, but that infrastructure is built and maintained by the other companies. Generally, by the people too dumb to have switched away to Vonage and their VOIP ilk.

    The problem is that Vonage is 100% dependent on the telephone network they are competing with. They are selling a service which requires their competitor to operate. This is generally a bad business model, except it can generate extremely high profits for a short period of time. Vonage can't put Verizon out of business as it would eliminate their ability to operate.

    Of course having a leech syphoning off the high-value residential customers does nothing but piss Verizon, AT&T and others off. This has been coming for a long time and it isn't over yet. I would guess some telecom company finds some way to put every one of the leeching VOIP services like Vonage and Lingo out of business soon.
  • So, let's play this game - we'll even name it something like China. You the player spend oh 5 years researching and creatnig some neato' keen scientificly designed product but you don't Patent it because well you just don't roll that way. So you bring this thing to market and it's really kewl but it's kind of expensive because afterall you have all those years of R&D to pay for and a family to feed. 2 months after having released your neato' keen device to market sales sharply drop. Gee, why is that? Oh wait, someone else is playing the game too. Only they are playing it a little different. Seems they were one of your very first customers only instead of using your product they took it apart, duplicated the pieces, and are now making them too - for 1/4 your asking price. They paid nothing for R&D other than the time spent reversing your product and because they have no R&D tail to pay for they aren't deep in the red like you were when you started. No patent so you have no way to fight them - now what? Two months is actually not a crazy estimate either BTW, hell these days you're likely to hand them the plans to manufacture your precious widget anyway. 5mins after the plans hit their desk they are being duped. Worse they might even run the production line double time - you get the products built during the day, they sell the products they built at night. Whoops, how do you fix that exactly? Think this through....

    The patent system right now SUX, I'll grant that. However it doesn't suck because the idea is completely bad it sucks because the patent office grants overly broad patents and because we have a judicial branch running amuck making decisions on technology they barely understand. Dumping the patent system while nice in fantasy land isn't going to necessarily mean that it will make things better. China, and other countries, are copying products with little to no R&D like mad and undercutting the real companies making these products. The result is that some of the companies are losing their ass due to R&D costs - what you propose, nuking the patent system, would allow this with no penalty. You sure that's what you want?

    Oh and yes people invented things before patents. Then they VERY closely held onto that information for fear that others would benefit from it if it was shared with anyone other than maybe an apprentice. They didn't simply tell every Tom, Dick, and Harry, who wandered by how to do the thing that allowed them to make a living I promise you. There also wasn't this huge global information system that would allow the information to spread like wildfire.
  • by IGnatius T Foobar (4328) on Friday April 06, 2007 @01:12PM (#18637067) Homepage Journal
    I'm surprised no one has posted this question yet: how will this legal battle affect other, smaller VoIP providers? I get my VoIP service from my regional ISP, and I'm very happy with it. They deliver a completely unlocked SIP service to me, and my Asterisk server uses it for outside calls. Will the Vonage patent-wielding kill my local VoIP provider too?
  • by Wansu (846) on Friday April 06, 2007 @01:16PM (#18637149)

      At least patents give the little guy a chance.

    Not much of one. It's expensive to enforce patents. The little guy will find himself out-lawyered when he takes on a mega-corp for infringement and he will not have as big a war chest as the mega-corp. So the mega-corp can outrun him and outgun him in court.

  • by mungtor (306258) on Friday April 06, 2007 @01:21PM (#18637217)
    That's why I prefaced it with the "if it's an obvious infringement".

    And in reality, that is a failing of the legal system not the patent system. You right about the overall effect (little guy == screwed) but the patent system isn't the one doing the harm.
  • Re:What? (Score:5, Insightful)

    by Jah-Wren Ryel (80510) on Friday April 06, 2007 @01:23PM (#18637251)

    Say you walk into a room. There's a sword leaning against the wall next to the threshold and a fully armored knight charging you with his sword held high. Do you pick up the sword and parry, or do you simply make peace with your last few seconds of life?
    Your analogy is much more apt than you apparently realize.

    You can not hope to prevail against that armored knight. If he lands one blow, you are effectively dead. If you land 100 blows, maybe he gets a few bruises. If you fight you are guaranteed to die, it is just a matter of how many minutes it will take.

    If you negotiate, you might convince the guy to stop, you probably won't but you've got a much better chance of coming out alive than if you take the inevitable path to death of engaging in a totally mismatched fight.

    Of course there is a third option - get the hell out of the room. Same thing with patents, if there were no patents to fight with, then they wouldn't be able to kill you with them.
  • by Paulrothrock (685079) on Friday April 06, 2007 @02:11PM (#18638101) Homepage Journal

    If I connect Vonage to my cable broadband and call someone else who connects their Vonage box to their cable broadband, where is the phone company involved?

    Seems to me that if Verizon has to charge twice as much as Vonage for half the features, the problem is with Verizon, not Vonage.

  • Leeches (Score:3, Insightful)

    by Erris (531066) on Friday April 06, 2007 @02:17PM (#18638181) Homepage Journal

    Of course having a leech syphoning off the high-value residential customers does nothing but piss Verizon, AT&T and others off.

    That's funny, as a "high-value residentail customer" I think of Verizon, AT&T and others as government dependent leeches. I'd love to see some real competition in infrastructure and I'm tired of government being the barrier to that. US infrastructure is no longer the world's best, despite great spending by people such as myself.

    This will continue into the future as long as government auctions bandwith and telco access to the highest bidders without reciprocal obligations. Liberating bandwith and access or forcing co-operation could fix things. Sucking taxes from monopolies does not.

  • by Concern (819622) * on Friday April 06, 2007 @02:32PM (#18638415) Journal
    You are smoking crack.

    They've demonstrated that you can do telephony over cheap packet switched networks like the internet for a tiny fraction of the costs of the incumbent telecoms. Not that that was a shocker. Those stupendously greedy assholes at the old school telecom companies have been price gouging so bad they've even intermittently attracted federal regulation. And we know how hard that is to do.

    Voip providers don't need the telecoms. As old-line telecom customers switch to Voip, then usage of bridges to the old line telecom network declines to zero. Data is carried according to the (slightly less rigged) internet pricing model. Everyone saves a fuckload of money and the economy grows. End of story.

    (P.S. - there's no "maybe" - that's why vonage-to-vonage calls are already free for vonage customers. Vonage users are largely paying - being price gouged, technically - for the use of the telecom bridge, for as long as it lasts. Once that goes, then prices drop even further, to the actual value of carrying a few kilobits a second...)
  • Re:Quiet weekend (Score:3, Insightful)

    by Dogtanian (588974) on Friday April 06, 2007 @04:01PM (#18639813) Homepage

    That statement suggests that Oasis wrote songs that *weren't* uninspired and derivative of the Beatles.
    Oh no, I think Oasis are (and always have been, particularly during the mid-1990s) horrifically overrated and derivative. But it's all relative.

    Their lyrics are mostly lousy; over-simplistic and brainless, not in any "genius simplicity" sense, they're just poor.

    But for all that, I can accept that some of their stuff is decent if you're into that sort of thing; there are even one or two of their songs that I quite like (or liked, before I got sick of them). And ironically for a bunch of Beatles fetishists, some of their early stuff owes more to the likes of The Who and the Sex Pistols.

    But they got into full Beatles-ripoff mode around the time of Be Here Now, their third album which was grossly overhyped, complete with the contrived-Beatles-style-references cover. Even their fans thought it was pretty mediocre. And "All Around the World" is a particularly formulaic and charmless Beatles copy.
  • by SeaFox (739806) on Friday April 06, 2007 @09:42PM (#18642807)

    The problem is that Vonage is 100% dependent on the telephone network they are competing with. They are selling a service which requires their competitor to operate. This is generally a bad business model, except it can generate extremely high profits for a short period of time. Vonage can't put Verizon out of business as it would eliminate their ability to operate.


    That doesn't make any sense. If Verizon went out of business Vonage would still be able to operate because either:
    1. Someone would buy up all Verizon's copper and start operating it themselves, in which case Vonage would simply be reaching all those people still using POTS through what is now their network.

    2. Or, assuming this means everyone has dropped Verizon as a phone provider (pretty far fetched), why would Vonage need them to route calls? There's nobody left to talk to through them! All calls would now be going to other Vonage subscribers (and not even leaving the network) or would be getting routed through other providers phone services.

    Major utility companies (and I'm going to lump large cablecos in there) do not just "go out of business". The name on the front may change but utility service is like nature, it abhors a vacuum. You're not going to have a major piece of infrastructure fall off the map and cut off a bunch of people, someone else will come in and buy it out and operate it generally exactly like it was operating before, at least in the immediate term, with no interruption in service for the people who where with the old company.

    Even if Verizon were to lose all their POTS customers due to Vonage, they would undoubtedly gain lots of new DSL subscribers from people needing access to make Vonage work. It would just be a major change in business direction for Verizon, not a death sentence. It's also a transition I'm sure they are trying to initiate anyway with their own VoIP offering.

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