Not for the first time, the technology world has a do-or-die patent judgment hanging over its head - “Judge grants partial stay in Vonage patent case”
The last such major drama was a bit more than a year ago, in the case of NTP v. Research in Motion (RIM), related to the Blackberry remote messaging service and its infringement of patents held by a patent licensing firm. In that instance, much of RIM’s effort before ultimately reaching settlement was dedicated to contesting the patents. During late 2005 and early 2006, there were many stories of successful challenges to NTPs patents, as reported here, here, and here, as well as myriad other places.
In that last linked story, one of the two primary crutches on which the losers of patent infringement cases regularly lean was described like so:
More bad news for we-don’t-actually-make-anything NTP in their long legal dispute with RIM — the US patent office just made a “first office action” rejecting the validity of the last of eight NTP patents they were reviewing, five of which were at the heart of the RIM patent infringement suit.
Another of the crutches is the all-too-common complaint that the Department of Commerce’s United States Patent and Trademark Office (USPTO) provides patents far too willingly, either for inventions that are obvious or trivial and thus not patentable or already widely known in the public domain prior to the patent filing. Disclosure of presumptively patentable inventions prior to first filing with the USPTO makes them ineligible for protection, in many cases, and certainly, disclosure by someone other than the patent applicant is strong indication that the invention fails the to surmount the hurdles regarding triviality and uniqueness.
Notwithstanding successful defense of patents widely considered invalid, like Amazon’s patent for “one-click” technology in internet commerce, dissenters regularly continue the argument, both generally (as with DNA patents in the comment linked to the ledt) and related to specific patents like Amazon’s.
In the case of NTP v. RIM, RIM had hoped to obtain reversals on all NTP-owned patents it had been judged guilty of violating. RIM ran out of time, and had to pay the piper, even though every single patent at the heart of the case had, by crunch time, been provisionally revoked. This was clearly an unfortunate, and arguably an unfair, result for RIM stockholders.
In the current case, Vonage was granted the temporary right to continue using the patents at issue, but not to use them in providing services to new customers. Vonage, predictably, was disappointed by this:
Roger Warin, a lawyer for Vonage, said the partial stay amounted to “cutting off oxygen and a bullet to the head” of the company.
And, given stronger finances, it seems possible that Vonage, like RIM before it, might attempt a blocking or delaying tactic while attempting to have the patents overturned.
But Vonage (they of the “shaky finances“, both before and after their IPO) isn’t RIM (they who, even if they perhaps shouldn’t have needed to pay NTP, weren’t mortally damaged by the battle). And Verizon isn’t NTP. It’s bigger, of course, but the technology underlying the patents at issue wasn’t purchased, to my knowledge, but was instead actually invented by Verizon. Even under the arguably silly (silly because patents, like other property, can be bought and sold) stance that NTP didn’t really deserve the patent protection it used to win the case, Verizon is a whole different breed of cat, possessor of many patents, quite familiar with the process of acquiring and protecting them, and to which such an argument doesn’t apply. Any attempts to invalidate its patents seem likely to be a hard battle, with at best an uncertain outcome for the challenger.
While “a bullet to the head” and “cutting off oxygen” seems less likely to guarantee instant death than a bullet to the lungs and cutting off its head would be, Vonage, as Mr. Warin said, is in deep trouble as a result of the only-partial stay of the patent infringement judgment. Inability to acquire new customers will be their death knell, given a business model that’s predicated, still, on market share growth instead of financial results.
Breathy claims, made during the initial trial, that they had alternative technology that could be used instead ring hollow for me, and were interesting for public- and customer-relations, but are not operative in a real world where new customers must coexist with old, and where implementing any sort of new technology, especially for a customer base far larger than the company’s service quality seems to merit, would be like performing open heart surgery in the bed of a pickup truck going 90 mph on a rough road.
Good riddance to a company that’s often treated its customers rather cavalierly? Perhaps not. But as a happy-to-be-ex-customer, I think it’s more likely than not.
Addendum - The more things change, the less they stay the same:
(5:47 PM ET Apr 6, 2007)
“Vonage receives stay, can continue signing up new customers“.
SAN FRANCISCO (MarketWatch) — Vonage Holdings Corp. said late Friday it has received a stay from a federal court in Washington, D.C., allowing it to continue to sign up new customers. Earlier Friday a judge the same court issued a ruling barring Vonage from signing up new customers, because Vonage in March had been found to infringe on patents owned by Verizon Communications Inc.
Apparently, Vonage used the “Oooooh! You’re killin’me” defense. So I guess we’ll just see.
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