More VoIP patent suits likely

The season for suing over Internet telephony patents has probably just begun, according to patent attorneys.

In fact, a week after Verizon won a $58 million patent suit against Vonage, a smaller firm, Web Telephony, filed a patent lawsuit that names Verizon and Vonage, as well as AT&T, EarthLink and SunRocket. Other companies are now much more likely to sue voice-over-IP (VoIP) service providers, thinking they, too, can get some money.

“Once you have a jury verdict come out, you may have patent holders lying in wait,” said Ed Pennington, head of the patent practice for Bingham McCutchen, a Washington law firm. “They may have waited to see what kind of damages were out there and could a jury follow this technology to make sense of the patent issues. A patent gets stronger through successful litigation.”

In the Verizon/Vonage case, a jury found Vonage had infringed on three Verizon patents regarding VoIP, two of which related to network address translation. It found Vonage didn't infringe on two other Verizon patents, while Verizon dropped two of its original seven infringement claims.

Patent claims are being waged now because VoIP is now being seen as a successful service, Pennington said, even though so far, the only company successfully sued-Vonage-has yet to turn any profits.

There are multiple companies holding “patent portfolios” in the VoIP space, Pennington said, including IDT Net2Phone, Sprint, Verizon and Web Technology. If these or even other patent-holders choose to press their cases in court, VoIP providers might find themselves facing a difficult decision about whether to invest heavily in a court battle or try to settle out of court, he added. Either way, the cost of providing VoIP is likely to go up, as legal expenses are factored in.

“It is not unusual to spend $10 million either prosecuting or defending a patent case,” Pennington told a VON audience in San Jose, Calif., last week.

Meanwhile, the Verizon/Vonage case moves on. A key decision was expected last Friday when a federal judge in Washington was to rule on Verizon's request for a permanent injunction against Vonage for use of the three patents the jury found had been infringed upon. More than likely, Vonage will appeal any injunction and seek a stay until its appeal of the jury verdict is complete, Pennington said.

There is hope for Vonage and other VoIP players in the appeals process, he added. Statistically speaking, about 50% of the patent infringement cases are overturned on appeal, Pennington added, primarily because a higher court finds the original judge construed the claim too broadly.

“Vonage will seek an injunction stay, pending its appeal, which will take about a year,” he said. “Just because Verizon got a good case construction at trial doesn't mean that it won't be reversed on appeal.”

In addition, he said, the search for “prior art” in the VoIP space can continue. Prior art is evidence that the material covered in a patent was actually either already patented or already published.

“It's never over when it comes to finding prior art,” he said. “The first place I would look at is whether there was a thorough review of the literature, not just the patents.”

Verizon's VoIP patents were filed in 1997, according to Rob Burton, another patent attorney for Bingham McCutchen.

The VoIP arena may also be ripe for “patent trolls”-companies that own patents but don't have any other assets or operations, Pennington said. Those companies may be looking for settlement cash from major players that want to avoid more costly legal wrangling.