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."

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:And so, the incumbent telcos smugly feel...

[garcia]

But there will come a day when we will kick their corporate corpses and spit on them.

That day will only come when the US Government, as we currently know and love it, dissolves because until then, it will be illegal to spit on those that fund our lawmakers pet projects.

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: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.

Interesting contradiction

[Secrity]

Interesting contradiction in a CNN article:

"We are disappointed that the jury did not recognize that our technology differs from that of Sprint's patents," chief legal officer Sharon O'Leary said in a statement. ...

"Vonage is working on a technology "workaround" to Sprint's patents similar to how it is addressing the Verizon patents."

Why would it be working on work-arounds for patents that it is not infringing?

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.

Re:And so, the incumbent telcos smugly feel...

[larry bagina]

Pet projects (like the bridge to nowhere, or 50+ Robert Byrd memorial buildings) are paid for by the taxpayer, which the federal gov't has no compunction about spitting upon. If the taxpayers (and voters) didn't hand them unlimited power in exchange for aiding "the poor", "the middle class", "the retired" and "the children", lobbyists and special interests wouldn't receive federal favors.

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:And so, the incumbent telcos smugly feel...

[plague3106]

Well, I hope Vonage continues, as I like their service. If it goes under though, the city telecom offers POTS over their shiny new fiber optic lines. The only reason I didn't get that with the TV and internet is because its more expensive than Vonage.

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.

Sad day for Americans

[BlueParrot]

It is increasingly starting to look like the US system will grind to a halt. The real question is what it will take for competition from abroad to force a reform. My guess is that sooner or latter the US economy will take such a hit that the rest of the world will no longer be dependant upon it. When that happens Black Tuesday will look like statistical noise in comparison.

Re:Absurd

[truesaer]

Do slashdotters just play dumb, or do 90% of the people that read this site not even know what a patent is? Just because you figured out how to do VOIP at some point doesn't mean that there is no way to patent some piece of technology that could be used to do it.

Vonage isn't in trouble for operating a VOIP service...tons of people do that, the cable company's phone offerings, skype, etc. I have no idea what patents they violated, but it would be a specific method or implementation...not the concept in general.

Dozens of other companies are doing VOIP and they're in the clear, so maybe Vonage just didn't bother to get the licenses necessary or use a different implementation.

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.

Re:Absurd

[nomadic]

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.

Ehh...not really. Juries decide questions of fact. Questions of law are decided by judges. A jury's decision rarely has any sort of precedential effect at all.

Re:Simply another step towards the next bell monop

[Anonymous Coward]

This is not free market capitalism. This is monopolistic capitalism with a dash of fascism, in that the corporations control the government. There is a huge difference.

Re:Vonage was just more corporate evil.

[karnal]

Supposedly they emailed me the notice to my dead old work account and that I should have made sure they had an updated email address before I canceled my account.

First rule: Don't use work e-mail for personal bills. Of course, unless they were related....

Re:And so, the incumbent telcos smugly feel...

[Anonymous Coward]

Their real plan is to continue changing their own infrastructure to IP and continue to charge their customers the same price, pocketing the difference for as many years as possible.

Re:Damn...

[letxa2000]

The founding fathers were for the most part the rich upper class of American society. They wrote the Constitution to suit themselves (for example, the Electoral College system made sure that the common people did not, in their ignorance, interfere with the political process), and the CEOs of major companies are their successors, the people the constitution waas written to benefit.

I can't believe this message was moderated as "Insightful." It's actually ignorance and cynical.

The electoral college only impacts presidential elections, and since the president can be overridden by Congress that are not elected by the electoral college, the political process can be "interfered" with by the common people just fine. And the electoral college, in practice, elects the person that is selected by the people--there are only a few cases of "unfaithful electors" in the electoral college.

Anyone who can honestly read the Constitution and come to the conclusion that it was written to protect the wealthy really needs to take their cynicism down a notch or ten.

Others in this thread are right: The patent system is being abused in ways that were not envisioned by the founding fathers.