Verizon Sues Vonage: Perspective of an IP Plaintiff

On June 19, 2006, two subsidiaries of Verizon Communications brought a patent infringement suit against Vonage in the United States District Court for the Eastern District of Virginia, seeking an injunction and damages.

Verizon sells a voice over Internet protocol (VoIP) service called VoiceWing, which converts a caller's voice signals to packets of information then sends them over the Internet to a recipient's telephone or VoIP-enabled computer. Vonage uses a similar process to provide services comparable to VoiceWing.

Vonage is allegedly infringing at least seven patents relating to VoIP owned by Verizon Services of Arlington, Virginia, and Verizon Laboratories of Waltham, Massachusetts (together "Verizon"). The technologies include: gateway interfaces between a packet-switched and circuit-switched network (as embodied in U.S. Patent Nos. 6,104,711; 6,282,574; and 6,128,304); billing and fraud detection (Nos. 6,430,275 and 6,137,869); call services such as call forwarding and voicemail (No. 6,298,062); and methods relating to the use of Wi-Fi handsets in a VoIP network (No. 6,359,880).

When a company believes its patented technology is being infringed, the first instinct may be to send a cease and desist letter to the infringing party. Such an action, however, can deprive an owner of strategic litigation advantages. When the other party is placed on notice of the rightful owner's concerns, they may file a declaratory judgment lawsuit in a U.S. District Court in their home district to secure "home field advantage." The declaratory judgment lawsuit will ask the court to determine whether the property rights are valid, whether they have been infringed, or both. Federal courts generally only allow the first lawsuit filed to go forward, which means that even if the rightful owner files an infringement suit a day after the other party, the owner's action will be stayed. A preemptive lawsuit also allows the other party to determine its litigation strategy, as well as gives the other party leverage in licensing negotiations.

One of the first steps when a company is considering litigation is to determine whether the other party is actually infringing the patent in question. A patent gives its owner the right to exclude others from making, selling, or using the invention, but does not confer the right to actually make, sell, or use the invention. The company may find that its patent is based on a patent owned by the alleged infringer. If this is the case, the company is actually infringing unless it obtains a license for the previous technology.

Besides purchasing a license, a company may investigate patent cross-licensing. When a company believes another party is using subject matter contained in the company's patent, they may offer a license to the other party in exchange for a license to use technology within the other party's patent portfolio. This option resolves the infringement without litigation or the payment of licensing fees.

Verizon did not notify Vonage of the alleged infringement prior to filing the lawsuit. This strategy gave Verizon time to select counsel, as well as investigate whether Vonage owns patents to similar technology. According to the complaint, Vonage does not currently own any issued U.S. patents. This finding may allow Verizon to rule out cross-licensing intellectual property or the possibility of a patent infringement countersuit and focus on stopping the perceived infringement.

Vonage is the current leader in the VoIP market and an injunction may seriously jeopardize Vonage's operations, allowing competing services like VoiceWing to acquire a greater market share.