Judge In Patent Case Puts Noose Around Vonage's Neck

from the competitive?-ha dept

Fri, Apr 6th 2007 9:07am — Carlo Longino

A judge today barred Vonage from signing up new customers, following the ruling last month that it was infringing on some Verizon patents. According to ZDNet, the judge "said it was the only fair option that would minimize harm to both companies for now." It's hard to see how that's true, though. Clearly the harm on Vonage isn't being minimized, as an inability to sign up new customers will eventually kill the company. Once again, it's hard to see how patents are being used here to promote innovation. It's fairly obvious that Verizon has no interest in settling the case or licensing its patents, but rather it's an entrenched, slow-moving telco that simply wants to shut down its competition rather than compete in the marketplace. It's sad to see the judge allowing them to cripple Vonage in such a way, particularly after the Supreme Court said in the eBay-MercExchange case that injunctions aren't always the proper remedy, while appeals courts seem to have a better understanding that immediate injunctions aren't always the best solution because the harm a false injunction can do is significant and irreparable. Another story says the judge concluded that because the telecommunications market is so competitive, that there would be no impact on the public interest if the injunction were put in place -- but what happens when Verizon and other companies start suing other VoIP providers for patent infringement, seeking in some cases, heavy damages, but in others, simply to get some of that competition shut down? Update: And wouldn't you know it, but an appeals court hours later has granted a temporary stay of the injunction pending a hearing on Vonage's request for a permanent stay.

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34 Comments

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Overcast, 6 Apr 2007 @ 9:25am

I'm not vonage fan, but I'm even less of a Verizon fan now..

I used to actually feel comfortable recommending Verizon. 'Used to' being the key phrase there.
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not Suprised, 6 Apr 2007 @ 9:27am

What's new?
Big guy crunching little guy.

Verizon making money the "legal way".

Loser winning the game on the table.
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SomePerson, 6 Apr 2007 @ 9:28am

FUCK Verizon
I hope this causes everyone to boycott verizon and they crumble and go bankrupt. This is total bullshit. If you can't handle competition, don't start a business. Fucking lazy assholes.
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Sean, a Long time Vonage User from PA!, 6 Apr 2007 @ 9:32am

FED UP!
If Verizon thinks this will send Vonage customer running back to them, paying the whore pricing they have for the same services, THINK AGAIN! I would rather do without, then go back to Verizon!
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Anonymous Coward, 6 Apr 2007 @ 9:36am

This judge is either willfully stupid, brainwashed or just another corporatized political robot.

Another example of the stealing of America by business.

When government is in a tight relationship with big business, it's called Fascism - look it up.

We have to start calling things by their real names.
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dcpizzle, 6 Apr 2007 @ 9:36am

vonage = terrible
all they've done is market and sell other companies' technologies. i don't see why people are pissed at verizon for this. vonage was doomed to start and will have never made a penny.

all verizon has done is use the legal system to protect its intellectual property. verizon didn't doom vonage, vonage doomed vonage. verizon isn't shutting them down, the legal system is. and rightfully so.
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Conflicted, 6 Apr 2007 @ 9:37am

Verizon & Patents
Verizon has the best coverage where I usually travel. So I've been with them for a decade. I'll switch this summer because of a) stupid competition with Vonage - which I was about to sigh up with and b) their ludicrous approach to international communication. (Appears to cost friom 10X to 50X as much to get coverage in Eurpoe as two other local providers).

Verizon - you should fire your legal department - it's going to cost you more than you imagine! Ask SCO!
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TheDock22, 6 Apr 2007 @ 9:38am

Re: FUCK Verizon
I hope this causes everyone to boycott verizon and they crumble

Sorry, as much as I don't agree with Verizon I will continue to use their services. I live in a state where Verizon is the only company I can travel to other cities with and not loose my signal. Alltel only work in the city I live in. Singular and Sprint are non-existent.

I hope Verizon stays for a long time, or else they will leave an entire state (an the surrounding states for that matter) without mobile services. So, even if a few people boycott them, they will still have over a million customers from states that have no other options when it comes to mobile service providers.
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Richard Ahlquist, 6 Apr 2007 @ 9:38am

Re: FED UP!
@sean,

Nahh they expect you to hate verizon, just enough to go to AT&T then shortly AT&T will buy out Verizon. Welcome back MaBell...
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Anonymous Coward, 6 Apr 2007 @ 9:42am

Ambition = good
Greed = bad

Success becomes harmful when it is driven by greed, rather than honest healthy ambition.

For example - Walmart. Ambition run amok.

Some shmuck in a movie says that greed is good, and everyone buys it.

Are we a completely stupid flock of sheep, or what!
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Sanguine Dream, 6 Apr 2007 @ 9:48am

Re: Re: FUCK Verizon

I hope Verizon stays for a long time, or else they will leave an entire state (an the surrounding states for that matter) without mobile services. So, even if a few people boycott them, they will still have over a million customers from states that have no other options when it comes to mobile service providers.

And that is exactly why telcos arrange monopolies in the areas they operate in. I'm in a similar situation with US Cellular being the only cell phone carrier in my area. They take advatange of the fact that they are the only cell phone option.

Plain and simple the days of outperforming the competition are long dead. These days it is cheaper, faster, and more profitable to set up a monopoly and secure a few million obvious patents. That way you force the customers to use your service and you can make revenue by suing competitors into oblivion.

I'm sure we all recall the days of the first dotcom bubble in which there were several "companies" that were nothing but a small group of people that would file for ovbious and unoriginal patents, hire a team of lawyers, then actively look for people to sue for infringment?
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Anonymous Coward, 6 Apr 2007 @ 9:50am

" I live in a state where Verizon is the only company . . etc"

Hey! Isn't that what the breakup of Ma Bell was supposed to stop?

How many phone companies that used to be part of Ma Bell are now together again?

The same thing is happening in the oil industry. Esso (Std Oil of NJ) was broken up into several pieces (Mobil, Amoco etc). They stayed that way for a long time. Now it's Exxon-Mobil. There are other re-mergers.

Never underestimate the power of payoffs to politicians.
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pandlcg, 6 Apr 2007 @ 10:04am

Bargaining chip
Is there any chance that Verizon is doing this to get Vonage at a cheaper price? Would there be any anti-trust violations there?
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Chipster, 6 Apr 2007 @ 10:06am

Who needs them?
Screw them both, Skype and Cricket.
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Branden, 6 Apr 2007 @ 10:08am

While I don't nessecarily agree that Verizon is legally in the wrong, they do own the patients (now whether they should have been granted, or they should be forced to licence them is a completely different story)

If they think this is going to engender them to the tech community (the people primarily using VOIP), especially if they those VOIP customers are going to come back, they are sadly mistaken.
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GuyMannDude, 6 Apr 2007 @ 10:13am

Interesting
Someone needs to tell Vonage - Looks like their signup page is still working as normal...
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Craig Ferrante, 6 Apr 2007 @ 10:18am

Support Vonage
My company utilizes vonage for our sales reps, its a big cost saving over using the local telco's. I vagly remember a website called DialPad.com that was bought out while back but they have the voip back in 1998 when i used it to call friends that were out of state. I dont see how verizon can say they are the only company that had pattents on voip.
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Anonymous Coward, 6 Apr 2007 @ 10:53am

The real losers are the advertising agencies and television stations that won't be getting the hundreds of millions of dollars in marketing spend from Vonage.

The company was bound to fail and it did. Just not for the reason most people expected...
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GoblinJuice, 6 Apr 2007 @ 10:54am

Huh.
Not sure who I should root for in this battle - Giant Telco A or Giant Telco B. Jeesh. So, so hard.

I've got an idea! Let's make the CEOs of both companies wrestle! :-D

The winner gets the patents!
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Skyper, 6 Apr 2007 @ 10:57am

Vonage
I have Vonage. Customer service wise they suck! I also have skype IN and Skype Out. for a year of service at the cost of around what Vonange charges for 2 months service. The quality is good. I don't like cellphones but have one (I don't pay for it). I used to have SBC but they like Verizon are ten times worse than Vonage.
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Joe Smith, 6 Apr 2007 @ 11:27am

What are the patents?
What exactly is it that Verizon claims a patent on that the court found that Vonage was infringing?

Without knowing that, it seems impossible to form any sort of reasonable opinion on the rights and wrongs of this case. (Although I find it difficult to believe that Verizon has any legitimate patents that Vonage is infringing.)
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Guru80, 6 Apr 2007 @ 11:34am

Bull.....
I have used Vonage for about a year and a half without a SINGLE problem and really hope this doesn't end my service. I also use them for my business fax and really don't want to go through the process of transferring my fax number (if I can) to another provider since it is on ALL my marketing material and documents.

For my home phone I have always received nothing but crystal clear connections, never any hiccups and have never even noticed a single down minute that has ever effected me. The easy and free call forwarding is awesome and something I use every day since I am normally out on business.

Here is to hoping Vonage survives this and comes out unscathed on the other side.

Screw Verizon. Only used them one time and I am sure it was a fluke but they charged me for the wrong plan and excess usage for 3 straight months and acted like they did me a favor when they corrected it every month when I called in. After the third month I had to get an attorney involved and that finally settled the run around. It wasn't a pleasant experience trying to get 600+ dollars in overages taken off my account month after month.
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Anonymous Coward, 6 Apr 2007 @ 11:43am

"Verizon is the only company I can travel to other cities with and not loose my signal."...

How exactly does one "loose" a signal? Is the opposite of "loosing" a signal "tightening" it?

I know "lose" is a hard word, after all... It is what 2nd grade English? Sheesh.
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Beefcake, 6 Apr 2007 @ 11:51am

Comment 12
#12 might be onto something. From http://money.cnn.com/2007/04/06/technology/vonage.reut/index.htm?eref=rss_topstories

"The judge gave Vonage two weeks to try to convince him to stay the injunction. Verizon then suggested the judge allow Vonage to keep servicing its existing customers if a stay was necessary."

I don't pretend to have great knowledge of all this stuff, but why would they be interesting in maintaining Vonage's existing, rival customer base if they don't plan to acquire it?
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RandomThoughts, 6 Apr 2007 @ 12:02pm

Fairness? Looking out for consumers?

What cool-aid have you been drinking? There is no fair in the marketplace or our government. Didn't you see Jim Cramers interview? Did you miss the part where he talks about Wall Street "controlling the market"?
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GoblinJuice, 6 Apr 2007 @ 12:31pm

KOOL-AID
@RandomThoughts - It's Kool-Aid, baby! ;-)

I like the clear flavor! (Anyone who grew up poor will get the joke.... I hope....)
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Mark, 6 Apr 2007 @ 12:53pm

Nice work, Verizon
When I was younger the conventional telephone system basically defined ubiquity. Now I'm one of those people who would never go back to it as long as any alternative was available. I have to tip my hat to Verizon and the other big CLECs for managing, against all odds, to usher in a day conventional phone service with "long distance" is an extravagance that many people won't pay for.
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Dam, 6 Apr 2007 @ 1:08pm

Re: Re: Re: F**K Verizon
And that is exactly why telcos arrange monopolies in the areas they operate in. I'm in a similar situation with US Cellular being the only cell phone carrier in my area. They take advatange of the fact that they are the only cell phone option.
Uhh...cell providers are NOT monopolies, they are free to set up just about anywhere with FCC approval. The reason your area doesn't have more providers is due to a lack of population density.

If you live in a small market, don't expect to have four different providers beating down your door. There just isn't enough business to go around and everyone to be profitable.
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john caddidy, 6 Apr 2007 @ 1:09pm

Are you for real?
Would one of the grownups out there please educate Little Carlo about how the world works. I do expect this sort of knee-jerk dribble from you folks. Happily, I don't return much to this site. But once a week, I do drop in to see what the latest silliness is. You have absolutely no clue about business. That's why your site is worthless. Utter bilge.
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Matt Ellsworth, 6 Apr 2007 @ 5:01pm

I'm switching thats for sure...
I've decided I'm switching to globalinx - they are hq'd 50 miles down the road from me and i have met the staff and the owners... the price is the same - excpet for the inital setup fee - which isn't bad. but other than the - same voip service as vonage with tech support that is based in Rochester, NY.
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Anonymous Coward, 6 Apr 2007 @ 5:48pm

Re: FUCK Verizon
Start a business? They invented it. Remember? If you don't like them don't buy from them. Thats the power a consumer has.
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Joe Smith, 8 Apr 2007 @ 12:11pm

Re: Are you for real?
If you hate the site but come back once a week that probably means that you're a shill for someone paid to monitor blogs.

You could do something useful and tell us what it was that Verizon patented that Vonage infringed. Without that knowledge it is impossible for you, me or Carlo to reasonably take sides on this issue.
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LogicalThinker, 8 Apr 2007 @ 7:09pm

Re: Re: Are you for real?
The specific patent in reference, from my understanding, is the methodology behind encoding voice into digital data, breaking the data into packets, and transmitting it. Verizon has a specific software called VoiceWing that it developed years ago that utilizes the specific method, and they patented it - it seems that the technology that Vonage came up with is similar enough to Verizon's that it could be patent enfringment.

Not sure that the noise is about verizon being evil, aside from the fact that it was a little company that actually made it in the world and is now a big company... in a year or two, if vonage survives, will it be evil too, as it grows? How about google... seems that the tides are already starting to turn on that one.

Verizon asked for Vonage not to be stopped as a business, which was in their legal right to request in cases like this - instead they asked for it to stop adding new customers using the technology in question. Vonage can work on adapting their current technology to something that doesn't infringe on another companies intellectual property and continue as a business.

Vonage is cutting in on Verizon's profits, allegedly using a system that is patented - why wouldn't Verizon try and stop them; that's how business works. You can't always be 'nice' to the competition, or your company and the hundreds/thousands of people who depend on you for their paychecks suffer.
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Super Pissed Vonage Customer, 10 Apr 2007 @ 6:32pm

I'm feeling it. Vonage service is acting buggy and some features look like they are under re-construction. I'm not sure if the two are related but I will go with another VOIP rather than pay Qwest for service. I'm getting used to paying under $20 a month for home phone. Fuck you Verizon and all the others that rape the consumer for technology that has been around for 100 years. Bastards!
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