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Wednesday, September 26, 2007

Poor Sweet Little Vonage - The Appeal

From Rollerball (1975): John Houseman playing Bartholomew: "The game was created to demonstrate the futility of individual effort. And the game must do its work.

The Energy Corporation has done all it can, and if a champion defeats the meaning for which the game was designed, then he must lose. I hope you agree with my reasoning....

P.A. Announcer: Ladies and gentlemen, our Corporate Anthem..."

In March, Vonage suffered a jury verdict finding the violation of a patent owed Verizon Communications Inc. and assessing $66 million in damages plus a 5% royalty.

Yesterday, Vonage Holdings Corp., the VOIP internet telephone provider, lost a second major patent infringement lawsuit.

The jury said it should pay $69.5 million in damages to Sprint Nextel Corp. plus a 5% royalty on sales in the future.

Today, The U.S. Court of Appeals for the Federal Circuit in Washington today upheld a finding that Vonage infringed two of three patents in the Verizon vs Vonage case.

It sent back a third patent for reconsideration. Since the jury's $58 million award was based on the infringement of all three patents, the damage amount also was sent back to the lower court.

The patent 880 returned to the lower court relates to use of Wi-Fi handsets in an Internet-phone network.

The two patents 574 & 711 the appeals court agreed Vonage infringed cover a way of connecting Internet calls to standard phone lines and functions such as call forwarding on an Internet phone network.

The opinion states:

"We hold that the district court did not err in its construction of disputed claim terms of the ’574 and ’711 patents. Therefore, we affirm the judgment of infringement with respect to those claims.

However, in light of the error in the construction of the claims of the ’880 patent and the possibility of error in the jury instruction on obviousness,

we remand to the district court to determine whether prejudicial error occurred with respect to the jury instructions that would affect the obviousness verdict with respect to the ’880 patent.

We vacate in its entirety the award of $58,000,000 in damages and the 5.5% royalty and remand to the district court for further proceedings

The Nattering One mused here... "how Verizon "owns" patents on VOIP technology is beyond me.

It would be like owning TCP/IP or ETHERNET and for every packet on the internet you get paid a royalty....

homey don't think so... why isn't Verizon suing Yahoo, Google or anyone (else) providing VOIP??

Even if Vonage survives, Nextel/Sprint is next in line to bend over poor Vonage with a "patent" lawsuit

In Poor Sweet Little Vonage we mused...

The claims "infringed" upon in Patents '711 & '574: the "inventors" at Verizon "created" what could be called DNS for phone systems.

The claims in patents '711 and '574 are very broad in scope. This (DNS) information is in a public database, which anyone can use.

Given that JEEVES was translating names to numbers on the ARPANET in 1983; it would appear that at a minimum claim 20 of (Verizon) patent 711 is obviously and patently UNPATENTABLE.

The claims "infringed" upon in Patent 880: this appears to be a public/wireless/cordless gateway setup for wireless VoIP.

Vonage and all other SIP-based VoIP providers use standard protocols specified in The Internet Society RFCs of which the SIP REGISTER method is one.

The claims made in patent 880 are for the normal use of the SIP REGISTER method.

Once again the claims in patent 880 are very broad in scope (and given that RFC2543 pre-dates the Verizon patent) and clearly appear to be obviously and patently UNPATENTABLE.

What Verizon claims as unique in 880 is simply the act of performing these operations over a WiFi gateway.

Verizon's claim is analogus to patenting the use of normal eMail protocols when connected to a WiFi Hotspot.

Therefore, if Verizon prevails, the use of any VoIP telephony device (no matter who the ITSP provider is) from any WiFi Hotspot and anyone who has bought ANY WiFi SIP phone, is in infringement of this "patent".

If these patents and their claims are found valid, Vonage would find it difficult to design an alternative way of hooking its network to the [PSTN].

And so would any VoIP provider as the entire VoIP industry has built its back on the ENUM standard in RFC 3761.

Therefore, the entire VoIP industry would have to shut down, and the ENUM internet standard as defined would also be dead.

Globally these so called patent's are INVALID and UNENFORCEABLE, because you can only patent devices, you can't patent "a way of doing business" anywhere but in the U.S.

We now muse... if necessary, Vonage should mirror their entire service environment off shore, then flip Verizon, Sprint, the Court and US Patent System the bird.

We also commented on other aspects of this case here and here and here the Washington Post echoed our Natterings.

"If you translate these patents so ridiculously broadly, then there's nothing left, everybody infringes."

At the same time, Sprint was considering buying Vonage.

Lightreading reports that Vonage is talking partial buyout with another advisarial holder of bogus patents - Sprint Nextel.

"Our sources confirm Sprint and Vonage have been in talks about the patent issue, and one source says Vonage is considering selling itself to Sprint."

We Nattered... Why would Sprint want to buy Vonage? Answer: Same reason Verizon would like to...

With Vonage's stock tanking on the lawsuit news... Vonage's 2.4 million customer subscriber base can be picked up for approximately $150 per subscriber, and thats a bargain

We updated on an injunction which allowed Vonage to stay in operation here.

Vonage and your attorneys... In all of this confusion, you have to ask yourself this question, do you feel lucky?

You should as the claims in patent 880 and the judgement were struck down and remanded.

Oh Nattering One, patent 711 and 574 were upheld. Why should we feel lucky?

The claims in patent '711 and '574 are IMPLEMENTED via the claims in Patent 880.

Furthermore from Judge Gajarsa's partial dissention: "Vonage should be entitled to a remand for further proceedings on infringement of the ’711 patent.

I would conclude that Vonage has correctly stated the definition of the term:

a "destination address," as that term is used in the ’711 patent, is the address of the endpoint of a call.

The examples supplied in the patent’s written description all speak to the "destination" or "destination address" as being that of the actual called party.

The patent clearly distinguishes intermediary pass-through nodes on the network from the endpoints.

The majority points out that the patent describes an embodiment in which the "destination address" is only a telephone number,

the dependent claim actually asserted by Verizon explicitly requires that "the . . . destination address include[] a numeric Internet Protocol address," excluding phone-number-only embodiments.

The evidence here indicates that Vonage’s position on the endpoint versus intermediary issue—the relevant issue actually disputed by the parties—is correct.

Verizon’s theory of infringement, to the extent that it identifies the address of an RTP relay as a "destination address," is without merit under that meaning.

Should this argument to strike down 711 hold as well as the obviousness of 880, 574 may become a moot point.

Regarding the obviousness... We updated here on the KSR decision which should have cleared the way for the Circuit courts previous broad misinterpretations regarding Verizon's and Sprint's bogus patents.

The case centered on the requirement that an invention be "non obvious" and not simply combine prior inventions or prior art.

"In determining whether the subject matter of a patent claim is obvious, neither the particular motivation nor the avowed purpose of the patentee controls.

What matters is the objective reach of the claim. If the claim extends to what is obvious, it is invalid under §103

More from today's decision: "First, we note that there cannot be prejudicial error with respect to the ’574 and ’711 patents because Vonage does not dispute that the obviousness testimony at trial centered on a single reference

(U.S. Published Application No. 2003/0193933 ("Jonas")), and thus any alleged error in instructions requiring a finding of motivation to combine several references would have been harmless.

With respect to the ’880 patent, because the majority is revising the claim construction of several key terms, a remand to the district court is necessary to consider whether a new trial should be granted on the issue of obviousness.

In light of that remand, we also think it best to allow the district court to consider in the first instance Vonage’s argument concerning alleged error in the instruction under KSR, and to consider the issue of prejudice

The Nattering One would hope that the remanded case and an appeal on the erroneous Sprint decision will fall under this new "obviousness" test.

And that Vonage's attorneys will make a motion for judgment as a matter of law on this theory in regard to claims 26 & 27 of patent 574; claims 15 & 20 of patent 711; and claims 1, 6, 7 & 8 of patent 880.

Thus putting their argument properly before the court. As said test would invalidate all of Verizon's and Sprints claims and "patents" .

The most heinous thing in all of this is the OBVIOUSNESS in which Verizon and Sprint combined prior inventions and prior art.

All of the "patents" are based upon and preceded chronologically by common public RFC standards and open specifications.

Said standards and specifications were contributed to and collaborated on in an industry wide COMMON EFFORT by Verizon, Spint as well as OTHER providers and equipment manufacturers.

Verizon and Sprint now claim to have exclusively patented the intellectual property contained in said copyrighted open public domain standards at the expense of all other participants.

We repeat ourselve again:

Allowing patents like this to stand would be analogous to allowing Verizon and Sprint...

to patent the common practice of placement and use of salt and pepper shakers on public restaurant and cafeteria tables.

And should they stand, perhaps photosynthesis and defecation will be patented next by Verizon and Sprint

The cases are Sprint Communications Co. v. Vonage Holdings Corp., 05-2433, U.S. District Court, District of Kansas (Kansas City).

The lower court case is Verizon Services Corp. v. Vonage Holdings, 06cv682, U.S. District Court, Eastern District of Virginia (Alexandria).

The appeal is Verizon Services Corp. v. Vonage Holdings Corp., 07-1240, 07-1251 and 07-1274, all U.S. Court of Appeals for the Federal Circuit (Washington).

Once again, a BIG tip o the hat to Bloomberg; PGL at Angry Bear; Dr. David Altig at Macroblog ; and Dr. James Hamilton at Econbrowser for their assist in getting the word out.

From Rollerball 1975, James Caan's character Jonathan E.: "Four or five little things make one big thing.

P.A. Announcer: Ladies and gentlemen, will you stand please for the playing of our Corporate Hymn


At Thu Sep 27, 06:37:00 AM PDT, Blogger Eric said...

It's hard to find people out there who truly know what's really going on here. It shows how much you really must understand to make an informed, fair observation of these cases. Vonage's reputation is getting dragged through the mud based on folks shooting from the hip, knowing only 10% of the facts, and 0% of the RFCs out there. Cudos to you for doing the due diligence necessary to make an accurate, well-thought-out opinion. If only the so-called financial news sites would spend this much time and effort to look past the sensationalists' headlines and think for themselves.

At Thu Sep 27, 08:45:00 AM PDT, Blogger Mr. Naybob said...

Eric, Thank you. You nailed it, thinking for oneself is discouraged, because it leads to originality and dissent.

At Fri Oct 05, 01:12:00 PM PDT, Blogger Julie said...

The only winners here are the lawyers because VoIP is a great offer that delivers real value. Pity since it is likely that Vonage will hemorrhage due to the FUD factor (fear, uncertainty and doubt). And worse, it will give a black eye to all of the other good providers like Net2Phone and Lingo.

I have Net2Phone and I like them because they seem to have focused primarily on developing technology with a great set of features - rather than throw money at campaigns. After more than 10 years, they are not the Johnny come lately so at least I feel safe with them.


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