VoIP service provider Vonage has acquired three patents from IP license aggregator Digital Packet Licensing LLC. The patents (4,782,485, 5,018,136, 5,444,707) deal with various aspects of data compression for VoIP traffic, and are already the basis for lawsuits against Sprint, Verizon, AT&T, and Nortel, among others. In the press release about this acquisition, Vonage president Michael Tribolet says that “The acquisition of these patents is part of Vonage’s strategic plan to further develop our core technology and build on our innovative, affordable and feature-rich phone service. Vonage’s strategic plan also includes a concerted effort to grow, create and acquire other significant intellectual property portfolios.”
So far, this sounds an awful lot like patent trolling, doesn’t it? Buy a portfolio of patents with existing licensing deals and a couple of infringement lawsuits already in motion, then stand back and reap the rewards. But the situation isn’t quite that simple.
In other news yesterday, Vonage was itself slapped with a fresh patent infringement lawsuit, this time by a tiny tech outfit by the name of Klausner Technologies. Fresh off a successful lawsuit against AOL, based on the same digital voicemail patent (5,572,576), Klausner is asking Vonage for US$180 million in damages and royalties. Vonage is also already the target of a lawsuit from Verizon, where the telco claims infringement of seven different patents.
Where there’s smoke, there’s fire; maybe the Digital Packet patents were bought as insurance and defense against the incoming stream of suits, rather than aggressive tools for seeking easy revenues from lawsuit settlements or judgements. You be the judge.
I’ve been a fan and user of Vonage’s phone service for years, so there’s nothing wrong with the service in my opinion. The business side of Vonage is a different story. The company is hemorrhaging cash and may never be profitable. That’s not conjecture, but clearly stated in the company’s prospectus for its IPO filing. Vonage looks like a train wreck in progress, and these patent issues may speed or slow the progress of that, but won’t stop it either way. I’m afraid I’ll have to change my phone provider soon, maybe in the next two or three years, but not because I’m unhappy with my current one. It’s because I think it may go out of business.