IPUrbia

Issues like the Vonage versus Verizon patent case illustrate an annoying problem in the Internet–at times, there is no original content. Armed with the several search engines, it still took me quite a while to find anything more substantial than repetitive copies of the same blurb simply stating that Verizon won their patent case over Vonage with little substantive analysis. Since, based on a couple of recent conversations on the matter, I wasn’t the only one frustrated with the lack of real information on this case, I did a little bit of research on the matter.

So what are these mysterious patents? What do we need to fear in the industry? Read on for more… (Note: this is purely a layman’s interpretation; for reliable legal counsel, contact an attorney.)

Patent Summary
I’m listing out all of the patents that were leveraged against Vonage; these are pulled from a copy of the filing. I’ve not been able to get my hands on a copy of the ruling, so I’m having to guess which ones actually were upheld in the verdict against Vonage. More specific information, of course, is welcome.

• Patent #6,430,275: (Upheld?) Enhanced signaling for terminating resource (issued 8/2002)
• This patent pretty much covers a generic system for VoIP/POTS handoff with real-time billing/authorization. The key point covered by this patent is the connection between “switched telephone network” (POTS) and a “packet switched network” (Internet).
• Patent #6,137,869: Network session management (issued 10/2000)
• This patent pretty much covers CDR’s and database-oriented authorization for calling.
• Patent #6,104,711: Enhanced Internet domain name server (issued 8/2000)
• Enhanced DNS service that returns different routing information based on certain criteria such as nonavailability of a given host.
• Patent #6,282,574: Method, server and telecommunications system for name translation on a conditional basis and/or to a telephone number (issued 8/2001)
• Pretty much the same as the previous patent.
• Patent #6,128,304: (Upheld?) Network presence for a communications system operating over a computer network (issued 10/2000)
• Covers a system where, when a call is placed, the system determines whether the destination is available and forwards to an alternative destination if unavailable. The wording of this patent seems to be oriented towards voice mail.
• Patent #6,298,062: System providing integrated services over a computer network (issued 10/2001)
• Selective call routing. Not too different from the previous patent in a lot of ways, but covers features such as ring-anywhere feature that is popular in VoIP where a single telephone number can ring an office, cell, and home phone.
• Patent #6,359,880: (Upheld?) Public wireless/cordless Internet gateway (issued 3/2002)
• This patent basically describes a telco switch with integrated wireless capabilities.

Analysis
Although the ruling against Vonage is a big win for Verizon, it is apparent that this case was simply an ideal test case to get Verizon a positive ruling on their patents. Vonage is ideal because:

• No patents for a counter lawsuit
• Prominent company
• Limited resources for legal defense (compared to, say, Comcast or Time Warner)

I assume that, with a positive ruling in its belt, Verizon may look to bring pressure on more major players; Vonage itself, for all of its name recognition, is struggling to even come close to breaking even and has major customer retention problems and poses little long term threat to Verizon. Likely targets would be wholesalers such as Level3 and major market threats such as the various cable MSOs. Still, these companies will generally be better armed for a patent war, so, legal precedence or not, Verizon has to tread carefully.

We know from press releases that the following patents were upheld:

• technology used to bridge Internet calls to the traditional phone system (Patent #6,430,275)
• features such as call-waiting and voice-mail (Patent #6,128,304)
• wireless Internet phone calls. (Patent #6,359,880)

It’s hard to tell the impact of the ruling. The second upheld patent (Patent #6,128,304) is an easy work-around on a technical level; the language of the patent describes a system where, if an incoming call cannot be placed to its destination, it gets routed elsewhere. The language of the patent specifically calls for a real-time attempt to place the call:

17. The method of claim 16 wherein the step of determining whether the terminal end-point is available comprises routing the incoming call to the terminal end-point and monitoring whether the terminal end-point responds to the incoming call within a preselected time period.

This detail provide a nice loophole. Most VoIP platforms use some sort of SIP registration; using the status of the SIP registration (rather than the actual call itself) to determine routing ducks this particular patent, as far as I can tell.

I’m fairly surprised that the wireless patent (Patent #6,359,880) got upheld in this instance since the patent itself seemed more applicable to something like a VoIP based cellular provider than Vonage–after all, Vonage’s offerings do not seem to have any services that are designed for wireless per-se (the language of the patent does not cover, as far as I can tell, any cordless-style phones).

The most damaging patent seems to be Patent #6,430,275, which covers the technology bridging POTS and VoIP. It is doubtful that this patent will affect the myriad of VoIP companies that do not do their own termination; since they don’t do the actual hand-off between POTS and VoIP, they shouldn’t be liable. Nevertheless, wholesalers such as Level3 and companies that do handle their own POTS termination are potentially liable under this patent, including cable companies offering voice services.

There is an interesting twist to the patents involved in this trial. Patent #6,430,275 specifically spells out a patent for interconnecting switched networks (traditional telephony) and packet-switched networks (Internet); most of the other patents also have similar language. Pure voice over IP services–including Skype, IM, VoIP peering, etc…–are immune from most of these patents. The interesting part comes as the ILECs themselves migrate to VoIP networks. While the ILECS are years away, I’m sure, from pure VoIP networks, many of them already have already begun migrating their backbones to packet-switched network. If their network is fundamentally packet-switched (on a transport layer), then the patent may become invalid. Any telecom lawyers care to comment on this?

Technical details aside, it goes without saying that this patent can be potentially disruptive and will probably be used aggressively against VoIP companies. Still, the potential threat can be–and is already–overstated. Voice over IP did not die at this trial. Most of the major players–Verizon’s true immediate threats–hold patents of their own that can be used defensively if needed. Most of the smaller players are simply below Verizon’s radar. Many other players in this market are immune by the peculiarities of their market arrangements and technical implementations. Also, as ILECS themselves start switching to packet-switch backbones and networks, these patents also lose their validity as they are written in language that specifies POTS to VoIP interconnections. Nevertheless, even if its actual impact is limited, the impact of the related FUD–encouraged, to be sure, by a few strategic legal notices by Verizon–is sure to be much larger. Of one thing I am sure–we haven’t heard the last of this one.