Worried about Patent Problems and Termination of Service

Posts: 1 · New Forum Member Joined: Sep 12, 2007 Posts: 1

I live in Asia and am 3 year client of Vonage. October is my 1 month per year in US and don't want to be without service and no access to hardware/software if service terminates. Customer Service has no specific information to offer. Where does one find accurate prognosis of legal problems?

Posts: 53 · Full Forum Member Joined: Feb 22, 2007 Posts: 53

Vonage says it has a workaround in place. See

http://www.sfgate.com/cgi-bin/blogs/sfgate/detail?blogid=19&entry_id=20112

However, that doesn't address what it might end of paying in legal fees if it loses the suit, and the repercussions.

Posts: 90 · Vonage Forum Senior Joined: May 05, 2005 Posts: 90

I am no longer a customer of Vonage, as I am on Huges satellite modem now, and it doesn't quite work with Vonage. I use cellullar for 100% of my telephone calls. No land lines. But I have been following the Patent and other controversies.

I don't think Vonage will be forced out of business by these Patent disputes, which are a desperate ploy by the telcos to strike back at Vonage.

What is of greater concern to Vonage is its 250 million in debt which comes due in 2010. The company has yet to turn a profit, only because it has plowed all monies into marketing and expanding the client base. Given the tight credit market, it could be hard to renew this debt in 2010. A huge patent infringment payout could make this even more difficult.

But even if Vonage were to go belly up on this, chances are someone else would buy up the pieces and continue the service. It would make no sense to just walk away from an installed customer base and operating service. A bankruptcy court Judge would sell off the business, likely to one of its competitors or the creditors.

There is a lot more competition in this business than when Vonage started. Cable companies and Telcos are now bundling telephone service with internet and TV, and offering Vonage-like services for the same amount of money or less (at least the Cable companies are, the telcos are still outrageously priced).

So while this may be "bad news" for Vonage, its shareholders, and creditors, I suspect the customers have little or nothing to worry about. The worst that can happen is you will be out the cost of a router.

I did a search online for Patents or Pending Patent Applications assigned to Vonage, and found nothing, which illustrates the problem for Vonage. If you don't have patents of your own, you are screwed. A lot of Internet-based companies make the mistake in thinking that they don't "need" Patent IP. Wrong!

Results of Search in db for:
AN/vonage: 0 applications.

I suspect that some of the Patents asserted against Vonage are hoary old ADSL Patents that Bell Atlantic (now Verizon) got back in the 1990's. The telcos used DSL to digitize POTS signals and send them over twisted pair to expand capacity (which is why I could not get DSL service in Farifax county and used cable modem instead). This arguably "reads on" what Vonage is (or was) doing.

The deal is, though, if the other guy has a patent, and it is valid, and you infringe every element of at least one independent claim, well, you are screwed. I am sure there are zillions of postings from Patent haters claiming this is another example of why the Patent system is "broken".

But consider this: The main proponent of the Patent "reform" bill being snuck though Congress at the last minute is Bill Gates. If you think Microsoft is looking out for the rights of the "little guy", well, think again.

Vonage claims to have a work-around on the Patent. If they can do the same thing while avoiding at least one element of one independent claim, well, too bad for Verizon then. The system works both ways.

Good luck to Vonage. Some stormy seas ahead. But not as bad as those for GM and Ford.....