Vonage Loses to Sprint Nextel

These are mighty difficult times for Vonage as the incumbent providers have ganged up against them and have decided to compete on patents as opposed to technology. A federal jury has ruled that Vonage has to pay $69.5 million in damages to Sprint Nextel for using its patents. This is ultimately terrible news for consumers. I continue to be amazed at phone companies who say they have patents for VoIP and related technologies yet haven’t rolled the technology out to customers. Or they have rolled it our half a decade after the technology was patented.
The reality of the situation is Vonage is a fantastic marketing company and not a technology company. Technology companies often file for and receive numerous patents. A broad patent portfolio is a shield against patent lawsuits.
So Vonage had limited patent protection and marketing that should have made all the telcos envious. This is quite an achievement and shaking up a century-old industry is something to be proud of.
What is sad however is how easy it is to wipe a company away using not technology or better customer service but instead a patent portfolio which was amassed when the government was admittedly giving away patents too freely. So the IP communications market owes a great deal of gratitude to Vonage for what the company has accomplished. At the same time we should be upset the company did not acquire the patents they needed to be along-term success story. Sure, the game is not over but it is looking a lot worse from where I am standing.

  • Jim
    October 5, 2007 at 1:38 pm

    I lived through the wild west days of trying to get lower cost telecom services with competitive local exchange companies and was burned badly. Now I feel like this is a déjà vu – as I have Vonage service . I am tired of going with service providers who are either not well funded or in this case not well endowed with technology that is actually their own. The alternatives seem to be limited as many other providers are small or going under (just look at Sunrocket). I hear there are some good providers that are stable because they are well funded, e.g. Net2Phone, but I am very gun shy. What a mess!

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