The burgeoning Voice over Internet Protocol industry clipped a hurdle last week as Sprint Nextel Corp. reported that its subsidiary, Sprint Communications Co. L.P., has filed a patent infringement lawsuit against VoIP service providers Vonage Holdings Corp., theglobe.com Inc. and its operating subsidiary Voiceglo Holdings Inc.
The lawsuit, filed in the U.S. District Court for the District of Kansas, claims that the defendants have “willfully infringed seven patents related to voice-over-packet technology developed by Sprint Nextel,” and that the patents protect a “series of innovations that enable the processing and delivery of packetized voice and data communications,” including VoIP communications.
According to Sprint Nextel’s filing, the patents-which were issued in late 2001-cover “a method in which signaling is processed externally to a switch before it is applied by the network elements. The processor is able to select network characteristics and signal the network elements based on the selections. A network employing the processing method is also included, as well as a signaling system that employs the processing method.”
The accused VoIP providers typically offer software and hardware that allows broadband customers to place and receive phone calls using their computers. The voice traffic is digitized into packets and sent over the broadband connection to other VoIP users or onto traditional telephone networks either to landline or wireless telephone customers.
Sprint Nextel said it was seeking an injunction that would prevent the defendants from “further misappropriating Sprint Nextel’s technology and infringing Sprint Nextel’s patents.” The lawsuit also seeks unspecified monetary damages.
Ed Cespedes, president of theglobe.com and Voiceglo, said in a statement that he believed the suit lacked merit and that Voiceglo’s technology “is unique, proprietary and patent pending.” Cespedes also questioned the motive of the lawsuit.
“Use of the Internet is open to all,” Cespedes said. “Products like ours that are low cost or free, easy to acquire and global are a natural threat to incumbent telecommunications companies. Our products are meant to be the central communications hub of users’ lives. They encompass far more than voice and incorporate features like SMS, e-mail, messaging, audio and video broadcasting, podcasting, music, search, photos and more.”
Voiceglo recently reported that its GloPhone desktop telephony product has surpassed 5 million users around the world. The company’s stock plunged more than 15 percent after the lawsuit was filed to 27.1 cents per share.
Vonage, which recently surpassed the 1-million customer mark, did not return a call for comment. The company reportedly is in final preparations for an initial public offering. Published reports also indicated that Sprint Nextel and Vonage broke off merger talks earlier this year.
This is not the first tussle for the VoIP market. Earlier this year the Federal Communications Commission fined North Carolina-based telecommunications provider Madison River Communications for blocking customer access to Vonage’s service. Vonage also was barred from cellular pioneer Craig McCaw’s Clearwire Corp. wireless broadband offering, though Vonage recently noted it had come up with a technical fix for the blockage.
VoIP observers noted Sprint Nextel’s decision to seek judicial protection of its intellectual property could be the opening salvo in a long-term battle between legacy telecom providers and Internet-based start-ups.
“Sprint’s move appears to be the opening move in a widening strategy to employ patents now held by the various phone companies to protect their markets,” noted Thomas Duston, a partner at intellectual firm Marshall, Gerstein and Borun.
Duston noted that there were more than 1,100 issued patents and more than 4,400 pending patent applications that refer to some aspect of VoIP technology.
Duston warned that companies looking to pursue patent protections needed to be careful since many of them also offer some form of VoIP service that could be impacted if more claims are filed.
“Companies like Vonage will have more than Sprint to worry about,” Duston said. “But companies like Sprint offer their own VoIP services to businesses and others. They may reap what they sow.”
