Verizon Gets Its Wish, Vonage Hit With Injunction

from the nice-work-if-you-can-get-it dept

Fri, Mar 23rd 2007 12:21pm — Carlo Longino

A couple of weeks ago, Verizon won its patent infringement case against Vonage, and pushed for the judge to issue an injunction against the VoIP company in addition to awarding Verizon monetary damages. Today, they got that wish: the judge issued a permanent injunction against Vonage, and gave the company two weeks to organize and appeal and a technical workaround. This is pretty ridiculous, as the judge apparently doesn't agree with the Supreme Court's thoughts on injunctions in patent cases. What's slightly amusing, though, is that Verizon's lawyer essentially admits the company has turned to a lawsuit because it doesn't have any other way to compete in the market and is losing hundreds of thousands of customers to Vonage. A judge bought that line, saying an injunction was necessary because simply awarding damages "does not prevent continued erosion of the client base of the plaintiff." That gets to the heart of the matter: patents don't stand to encourage innovation, but rather simply as a tool to shut down those companies that do innovate. It's a pretty silly way to compete by suing your competition out of business in order to reduce customer choice. After all, wouldn't it be better to have customers who actually want to patronize your business, rather than those who simply do so because they have no choice?

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46 Comments

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Chronno S. Trigger, 23 Mar 2007 @ 12:43pm

F#@$
Douse this actually mean there shutting down Vonage? I hope Verizon knows I will never go back to them. I'd rather use my prepaid cell for the rest of my life.
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routerguy, 23 Mar 2007 @ 1:02pm

better to give customers a choice?
If I were a business owner, and I am, I would absolutely LOVE to have customers have no other choice but me, and I would do everything in my power to keep that situation in place. To suggest that it's better to innovate than to gain a monopoly position is just dumb. And if my competition does it by infringing on MY patents, on intellectual property I developed and own, then they should be ordered to cease infringing. How is Verizon wrong here? Why aren't you angry at Vonage for STEALING rather than INNOVATING? If I repackage your articles and use them to steal your traffic, you wouldn't want an injunction?
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Anonymous Coward, 23 Mar 2007 @ 1:07pm

Re: better to give customers a choice?
What the name of your company so I know not to do business with you?
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Chronno S. Trigger, 23 Mar 2007 @ 1:10pm

Re: better to give customers a choice?
What part of Vonage is infringing? And then tell me what part of that particular patent is not obvious. All VOIP is obvious to me since Apple talk.
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Anymouse, 23 Mar 2007 @ 1:26pm

This was all my idea - they owe me
I remember growing up with a commodore 64 and a nifty speach program called SAM (don't remember what the acronym stood for), where you typed in text and the computer would say it.

I thought, hey, if we could transmit this text over the bbs (on the 300baud modem) we could talk to people on the other end (converting text to speech on the transmitting end would be the hard part). So obviously all these 'telephone' and 'voip' companies are infringing on my ideas and they need to pay me.
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EdB, 23 Mar 2007 @ 1:30pm

Re: better to give customers a choice?
A-men! You don't go into business because you want to innovate and compete. Businesses exist to make money, and the easiest way to make money is to have the only source for a product people need.
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B_Billy, 23 Mar 2007 @ 1:46pm

Anymouse,

SAM stood for Software Automated Mouth. I had it for my C64 and Atari 800.

Oh yeah, I'll be dropping Verizon right quick!!!
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james, 23 Mar 2007 @ 1:47pm

routerguy, you simply don't understand what patents are for. It is jack-asses like you who ruin the system.

The patent system was designed to SHARE information (that's why patent records are so available). SHARING technology increased human knowledge and spurs the economy. In return for SHARING your technology, the government does a very strange thing and gives you limited protection for your idea for a limited time.

There is no inalienable right you get that stops you from coping my ideas, IP is a very abstract concept and one only granted by a government.
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GS, 23 Mar 2007 @ 1:49pm

Free Market always prevails... Until someone sues
Verizon fell asleep at the wheel and even admitted it. Vonage took a great idea and made it work, made it profitable, and marketed it well. Customers came by the droves - as they should. Verizon is the kid that didn't get its way and is now kicking and screaming. Instead of giving in to the brat, teach it a lesson in free enterprise!
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james, 23 Mar 2007 @ 1:50pm

Re:
Alright, my comment has a bunch of typos, but your get the idea.
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Bill, 23 Mar 2007 @ 2:04pm

What is so wrong?
Since when is the patent system supposed to be about sharing it is about securing your rights as the creator of what ever you patent. Verizon is not wrong to secure there business with there legal right to stop Vonage from using ideas that are clearly not theirs, you can say they innovated but as said in previous posts there was no innovation there was just good marketing....just because they market better does not give them the right to infringe on others no matter who you are.
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routerguy, 23 Mar 2007 @ 2:04pm

Intellectual property, Monopoly, and Protectionism
According to my professors, and the wiki, a patent gives the holder " the right to prevent or exclude others from making, using, selling, offering to sell or importing the claimed invention". It's not to "share" it's to PROTECT. Are patents misused? Absolutely. Are they misused in this case? Quite probably, although the details about which patents were actually infringed are obscure. Patent reform is clearly necessary (uh....one click checkout is patentable?!). I'm not saying I agree with the system, I'm saying as a BUSINESS OWNER, it's my job to maximize my profits using the tools at my disposal. FWIW, Vonage didn't innovate anything. They threw a metric buttload of capital into advertsing, and have ended up with a clearly unprofitable business. For those interested in the infringement itself, the best reference I've found is at http://ipurbia.com/2007/03/verizon-patent-analysis.html
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Anonymous Coward, 23 Mar 2007 @ 2:18pm

How can you be so sure
How can you be so sure that Vonage did infringe. Besides it would probably do Verizon good to have the competition. I don't want to be forced to use any company. I like choice and with choice comes freedom! It is like Microsoft getting all hung up on opensource/linux software. They can't compete with free so they try to cause all sorts of troubles. I don't like that. I like my choice and freedom. I don't want Microsoft or Verizon telling me what to do. So in my mind that makes Verizon wrong.

Besides the lawsuit isn't about infringement. Quote from the article:
"What's slightly amusing, though, is that Verizon's lawyer essentially admits the company has turned to a lawsuit because it doesn't have any other way to compete in the market and is losing hundreds of thousands of customers to Vonage."

Verizon just needs to get with the times!
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Russ, 23 Mar 2007 @ 2:21pm

Verizon v. Vonage
Leaving the intrinsically flawed patent system alone, I blame the judge. I cannot blame Verizon for trying to secure fleeting consumers, nor do I find Vonage a 'thief' of ideas or innovations. New ideas, aka modified old ideas are protected under various patents, etc. Its to prevent straight COPYING of registered technology (you get the point). However, why should Vonage be silenced for marketing BETTER? That's an incredibly HUGE part of business, and certainly grounds to be called 'more innovative.' Being more creative is not infringing on patent rights! I fail to see how 'client base erosion' is a concern that is addressed in the courts. We have different forms of subsidies in virtually every industry, so none of this is a surprise. Any intelligent judge, however, should just plain know better. Where's is my dictionary definition of competition?
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KevinG79, 23 Mar 2007 @ 2:24pm

I smell B$
Well, I for one will not be flocking over to Verizon once my Vonage service gets shut off. If Verizon thinks that THIS is how they are going to GAIN customers, they out of their minds. This is going to turn a LOT OF CUSTOMERS OFF TO yet another greedy corporation who is now trying to eliminate competition because they were too stupid to offer their own VOIP service. Vonage hasn't "stolen" anything and I do not understand why all of you "I'm a business owner" jackasses keep crying about it. Verizon had EVERY CHANCE to offer a VOIP service and compete with Vonage. But they didn't. They wanted to keep forcing their customers to use old, crappy technology and charge up the ass for it. Why is any of this Vonage's fault?? The old saying "you snooze, you lose" applies quite well to Verizon right now and I cannot believe a judge ruled in their favor. Just goes to show how screwed up "the system" really is.

To all of you Verizon supporters and monopoly fans... with your logic, you would support the idea of McDonald's being the ONLY fast food. Man, would that totally SUCK if my only choice for a burger was the $HIT they sell at McD's. It's the same with phone service. It is going to royally suck ass if my ONLY choice for phone service is by the big, greedy, evil TelCo known as Verizon.
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Rich, 23 Mar 2007 @ 2:37pm

Sounds Like
another monopoly wins again...
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PT, 23 Mar 2007 @ 3:20pm

Re: What is so wrong?
"Since when is the patent system supposed to be about sharing it is about securing your rights as the creator of what ever you patent."

Actually it is about sharing. Patents were suppose to be a way to foster innovation. How? By publishing ideas and allowing others to look at them and build upon previous ideas. But at the same time inventors have to eat too, so why not give them a bit of protection and allow them to profit from the invention for a limited time? So as an incentive from the government, an awarded patent is like payment for showing the world how your devices or idea works. So yes patents are suppose to be about sharing.

Well, at least they used to be.
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sendeth, 23 Mar 2007 @ 3:25pm

fcc violation
regardless of all of this patent argument, if vonage was a persons only phone in the home (ie, elderly, injured, etc), i know for a fact that it is an fcc violation to leave someone with no way to dial emergency services. that's why even cell phones still dial 911. if someone didn't immediately step in to provide emergency communication, they are just waiting for a law suit when someone has a heart attack and can't call for help because of alleged patent infringement.

and if that does happen, could the judge be removed for negligence???

i have said this over and over and over again. we have these technophobic fossils making laws for tech they don't understand. and that is a lot of our problem.
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Old Guy, 23 Mar 2007 @ 3:30pm

I wonder
Hmmm. I haven't ever used Vonage. but I do use Comcast's phone service. Which I believe is broadcast via the internet. If I am right I wonder how many more companies have "infringed" on Verizon's patent
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LL, 23 Mar 2007 @ 3:44pm

WOW
Vonage has been a very reliable and affordable company to me, It's to bad that Corporate Giants can push there weight around and screw up companys that do something for thier consumers, It makes me wonder if other companies offering the same type of services would be subject to the Verizon poor me I created this IDEA but never did anything with it so now that you all have I shall take from all your hard work........ Dont count on me being part of the Verizon Family...
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RandomThoughts, 23 Mar 2007 @ 3:48pm

Vonage was a hurting duck before this lawsuit, now? Lets see, Vonage is going up against huge companies with huge bank accounts, they offer 1 product against their competitors 4 (voice, video, internet, wireless), their entire network is controlled by their competitors, their primary product is trending to zero, they face regulatory issues, legal issues and have never shown a profit.

They did have some kind of funny commercials though.

IPO at $17, current price $3. Well, at least the founders of Vonage made a ton of dough.

Did anyone thing Vonage ever had a chance? Really?....
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bigpicture, 23 Mar 2007 @ 4:31pm

Re: better to give customers a choice?
What a bunch of crap, first of all that particular industry is regulated by license, so any one who wants to compete cannot just start up, because they cannot obtain the license to operate. Further screwing the customer.

Your way of doing ethical business is just like the doctors and drug companies, they don't want to cure you, they just want you to keep coming back for more visits and more drugs. Monopoly, what a benefit to society? The Mafia have their way of monopolizing too, so how come theirs is illegal and yours is not?
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RandomThoughts, 23 Mar 2007 @ 4:41pm

GS, exactly when was Vonage profitable?
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zeroproof, 23 Mar 2007 @ 4:44pm

Verizon vs. Vonage
The answer is very simple, Verizon should buy Vonage and end the matter.
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dento77, 23 Mar 2007 @ 4:49pm

Re: better to give customers a choice?
just wanted to say thanks for reminding me that i do have a choice as a consumer to pick and choose and sometimes do without if need be. note to self: boycott business owners with afore mentioned practices even if it means going without.
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RandomThoughts, 23 Mar 2007 @ 4:53pm

Zeroproof, why would Verizon buy Vonage? Citron tried to sell Vonage but was asking for too much. He missed his chance because eBay bought Skype (which people are still trying to figure out) and Vonage missed the boat. So instead, Vonage went public.

The real injustice is the folks that bought the stock in the IPO at $17 and now the stock is at $3. Think Citron cares? What, the SEC going to pull his license again? Fine him another $22 million again?

Vonage was a shipwreck long before this lawsuit, it was headed to the bottom, the suit will just speed up the end.
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Anonymous Coward, 23 Mar 2007 @ 4:59pm

wouldn't it be better ??
"wouldn't it be better to have customers who actually want to patronize your business, rather than those who simply do so because they have no choice?"

WE might think so, but Verizon and its ilk don't care - as long as your checks go into their pockets. It's not even rocket science.
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RandomThoughts, 23 Mar 2007 @ 5:04pm

"wouldn't it be better to have customers who actually want to patronize your business, rather than those who simply do so because they have no choice?"

Ummm, no. Given the choice, it would be much better if customers didn't have a choice.

One funny thing I noticed earlier was that 3 of the Google ads on this page were from Verizon.
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tom, 23 Mar 2007 @ 5:39pm

all i have to say
"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.
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Raj, 24 Mar 2007 @ 1:42am

Verizon is Veri bad Zone
Its a very customer unfriendly company and I hate Verizon. They made me pay thru my nose when I got out of their contract. This Vonage lawsuit makes me even more irate of them. I'll try and move my friends over to more friendly comapanies. Vonage is a great idea. Vonage rocks, Verizon sucks !
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Sanguine Dream, 24 Mar 2007 @ 7:00am

Re: better to give customers a choice?

To suggest that it's better to innovate than to gain a monopoly position is just dumb.

From the customer prospective it is better to innovate than gain a monopoly. I would much rather choose Verizon because I decide for myself that they are the best choice. Forcing me to use your service is a surefire way to make me look for alternatives or just decide not to any if there is no better choice.

And if my competition does it by infringing on MY patents, on intellectual property I developed and own, then they should be ordered to cease infringing

And that is the main point of patent hoarding. Verizon went for a broad patent and then didn't develop it. They just sat around and intentionally waited for someone to actually do something in the VoIP space so they could cry foul. Now Verizon will sue Vonage into oblivion, take the ideas the Vonage developed, and about 1 year later Verizon will roll out its "new and innovative" VoIP service that will be nothing more than the dressed up corpse of Vonage

If I repackage your articles and use them to steal your traffic, you wouldn't want an injunction?

That depends on why the people at Techdirt put articles on this site. If they are in it for the money then yes they may get mad. But if they are just trying to spread the work about tech related news then they just might thank you or not even care.

Businesses are in it to make money but for some reason they still try to convince customers that they are in it to serve the customer. If Verizon were in it only to serve the customer then they wouldn't be trying to sue Vonage instead they would just go to the drawing boards and try to out perform Vonage. You are either in it for the money or to serve the customer but you can't have it both ways. So that means customer service is your real goal or its just a means to dare I say...make money?
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Novice reader, 25 Mar 2007 @ 12:17pm

just a thought
All of this has been very educational. Being new to the whole system, I find that although I like what is tried a true I still want choices.

Everyone is in it for the money. As a consumer, it is important that we know the business as well as the product. Somewhere along the line the quality of service got lost.

What about the little guy? Doesn't it make a difference if those who don't know are told what is right?

Being a recent college graduate I have to wonder, do I need new ideas to get a job or should I even bother because no one wants something new and fresh.

Thanks guys. This has confused me even more.
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Andrew, 26 Mar 2007 @ 6:19am

Patents versus Trademarks
One of the ideas missing in the whole "innovate" versus "stockpile" debate on patents is a key point in trademark law. If you have a trademark and take no (reasonable) steps to protect it, you lose it.

Why can't the same be applied to patents? If you patent something and make no (reasonable) effort to use it, but just sit back and wait for someone else to, you lose it.

Trademark trolls don't exist for this very reason. The same is also (at least sometimes) applied to domain names and squatters.
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Sally, 26 Mar 2007 @ 6:32am

Patent/Copyright = Guaranteed Right to Be Rich?
My problem with all this ("all this" including the RIAA, Viacom, etc.) is the belief of the companies that a copyright/patent is a golden ticket that ensures that they will continue to make as much or more money than they made in the past. So if someone offers something that consumers really like, and people stop buying your products, they've infringed on your rights. It doesn't matter that you're selling camels and they're selling jet planes, anyone who contributes to you making less money is liable. And the worst thing is that the judges are subscribing to this view.

Whatever happened to survival of the fittest?
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Sumgai, 26 Mar 2007 @ 9:35am

Re: I wonder
Well Old Guy, you're partially right, but mostly wrong. Unlike Vonage, Comcast and other MSO's are running private networks. Is it technically VoIP? Sure. Unfortunatly companies like Vonage have put their own little association on the term in the same way Kleenex did to a tissue. MSO's utilize packets, but not over the public interent. What that means is if I (being a Comcast customer) call you (also with Comcast), we speak to each other completely managed over Comcast's network. Never touches the internet, never touches Verizon. Its a complete system in and of itself. Rather hard for Verizon to cry bloody murder over that. Verizon is grasping... as they should. Look how long it took for them to realize they had no choice. They are adjusting very poorly to the changes in technology and their place in the industry. So they decide, "HEY! Let's dump millions into running fiber as quickly as we can and do everything we can to recoup the debt we're putting ourselves in. Regardless of whose expense its at. Why? Not because we want to, but because we HAVE to."

History has shown, it matters not how big you are. Its just as easy for Verizon to fall as it is Vonage. In the end, it's just the souind of the "boom" that makes the difference.

For my own $0.02: What ever happened to the whole concept behind the Telecommuniations Reform act of 1996?!
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Pro, 26 Mar 2007 @ 10:44am

Re: Patent/Copyright = Guaranteed Right to Be Rich
Very well said Sally.

It's very similar to what AOL tried to stir up when some of the early cable companies started to roll out high speed internet service. AOL realized that dial-up service was doomed and tried to promote this idea that the cable lines should be opened up to other companies to provide service. By confusing non-technical people with nonsense, you can accomplish a lot.

btw, lots of people that pay for cable or DSL STILL think that they need to pay for AOL in order to be online - even though they are already connected to the internet.
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Don Hiles, 1 May 2007 @ 7:26pm

Verizon needs to adapt and adapt quickly.
Verizon can cry and wail all she wants about Vonage. If vonage dies, people will go elsewhere. Most will not go back to Verizon because there are other companies offering cheap VOIP as well. Verizon will never get their customers back. This is not just about Vonage, this is about things changing. Those who cannot adapt will die! No one wants to go back to the way it was. Verizon is fooling herself if she thinks she can kill one company and put things back the way it was! The Genie is out of the Bottle Folks!!!
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Jose A., 29 May 2007 @ 5:26am

Wireless Patent Infringement
Freetocompete.com -- JA4122 states that Vonage is infringing on Claims 1,6,7, and 8 of Patent 6,359,880 (Wireless Patent)by using devices having wireless capabilities to complete calls to and from Vonage customers on the Vonage network, including the V-Tech Ip8100 cordless telephones and accessory handsets, the F1000, and the Vonage Softphone (if it is installed on a computer wirelessly connected to the internet). What does this mean? If you have a cordless telephone connected to your Vonage device or any other VoIP service, you are infringing on this patent. If you have and are using Skype, for example, on a computer that is wirelessly connected to the internet you are infringing on this patent. According to this decision and patent, you are stealing technology - shame on you!!!! You are obviously to dumb and stupid to connect a cordless phone to a VoIP service. Only the most brilliant people could have thought that one up.
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k n, 24 Jul 2007 @ 9:14am

patents and more
if people still have questions about Why there are patents read here:
http://www.historical-markers.org/usptohistory.cgi

to read this patent. take a look here:
http://patft.uspto.gov/netacgi/nph-Parser?Sect1=PTO1&Sect2=HITOFF&d=PALL&p=1& u=%2Fnetahtml%2FPTO%2Fsrchnum.htm&r=1&f=G&l=50&s1=6,359,880.PN.&OS=PN/6,359,880& amp;RS=PN/6,359,880

"If I were a business owner, and I am, I would absolutely LOVE to have customers have no other choice but me, and I would do everything in my power to keep that situation in place."
I honestly can't believe there are still people out there who thinks it is better to take away a person's choice. Having a Choice is what the U.S. was founded on. It is the basis of freedom.
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AgentDuke, 28 Jul 2007 @ 1:01pm

Vonage has never been profitable. Since they stole the technology instead of invented their own, and then have never been able to turn that into profit, they don't deserve to live.

Anyone who has dealth with Vonage on a business level knows how bad they are. You'd think they (and not the VOIP providers charging 1/4 their price and 4x the service) would be turning profit. But Vonage sucks. Go to www.vonagesucks.com and sign up if you don't believe me.
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bob turner, 5 Aug 2007 @ 11:17am

i work at a..................
ok i work at a vonage kiosk in a mall in florida and i can honestly say you would not belive how many customers come up to me every day and tells me how bad verizon is the only thing that i have to say to verizon and would like to tell them this in person you are not going to be able to put us out of business this way because your customers hate you because you are not listening to them so start
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Robert from Riverside, CA, 19 Nov 2007 @ 1:02pm

They Both Suck!
I hate both companies! But, at least I was able to stop service with Verizon!

May be I can get a Verizon Lawyer interested in a class action suit against Vonage by collecting all Vonage's victims and sue the crap out of Vonage... Hmmm, I like that
Idea!

Verizon get rid of their trashy competition and we can make a few bucks... aaaaa, well actually, I don't care if I don't even make a penny as long as Vonage gets what they deserve!

Verizon has their own issues with all the cable companies now jumping on the band wagon and offering telephone service.

I hate Verizon and I think I hate Vonage even more, they both have their negatives!

May be a blackhole will come and gobble them both up!
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Robert from Riverside, CA, 19 Nov 2007 @ 1:06pm

Re: i work at a..................
Let me repeat myself, THEY BOTH SUCK!!
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Matt, 20 Nov 2007 @ 1:56pm

No problem with Vonage
I have had Vonage for close to a year and never had a problem what so ever. The only reason why I chose Vonage was because AT&T don't offer VOIP service in my area. Which is strange, if Vonage can then why can't they.
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Freedom, 8 Feb 2009 @ 8:52am

Re: better to give customers a choice?
Your love for bullying is appalling. Without choice there is no freedom. This makes no room for a better way to serve a customer needing service. Not only does this kind of thinking keep a strangle hold on those who can't afford the unchallenged price that a company can charge, but it's the very reason this Country is in the position it's in today.
I owned my own business as well. But I also welcome the competition. It helps one to stay focused on the customers needs, and not just ones own pockets.
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Whatthe, 16 May 2010 @ 3:39pm

Screw em
Your problem is your dependency on those phones.

In my area for a LAND line you get one choice, Verizon.

And for that matter you have one choice for electricity, as I am sure most of you do as well.

That these are not deemed monopolies and allowed to survive despite having even less customer service than competition is due entirely to the fact that we assholes let it happen. By now both telephones and electricity should be universal, regulated, and controlled by the people.

Until then, I threw my cell phone in the river. I suggest you go cold turkey and try the same.
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