Why Verizon Sued Vonage

November 23, 2007

I receive many questions about patents and why one company sues another. Patent portfolios are like nuclear weapons – if you have them, you are less likely to end up in a war. I was reminded of this idea as I read Ike Elliot’s Telecosm blog where he has an entry focusing on why Verizon is picking on smaller companies to sue.

Here is an excerpt:

How does a patent holder decide who to target? They usually consider the following:
1. Are we pretty sure the target is infringing our patent?
2. Are we infringing any of the target's patents?
3. Can we win a lawsuit if it goes to court?
4. Is it important to maintain positive relations with the target?
5. Is the target a competitor that we would like to impair?

This same argument by the way applies to AT&T and Sprint – both service providers have also sued the pure-play VoIP provider. Vonage is really vulnerable as it has done such an incredible job branding but not defending itself with a patent portfolio.

This should be a lesson to all companies who compete with powerful players and are taking share… Make sure you have a portfolio of patents to protect yourself or else.