Vonage denied retrial in patent case

Supreme Court ruling provides new basis for appeal

By OUT-LAW.COM, 4th May 2007

Voice over Internet Protocol (VoIP) phone company Vonage has been refused permission to have its patent case re-heard, but can introduce a new Supreme Court ruling in its appeal.

Vonage lost a patent infringement case brought against it by mobile phone company Verizon earlier this year. Its phone service was found to be violating three Verizon patents, and it was ordered to pay $58m in damages, pay a 5.5 per cent royalty to Verizon, and injuncted not to sign up any new customers.

In a separate case, the Supreme Court has just produced a new ruling on how courts should define what is "obvious" in a patent. Vonage argued that it would have won its case under the new guidance and asked for a retrial.

The US Court of Appeals for the Federal Circuit has denied Vonage its retrial, but it did say that the company could cite the new Supreme Court ruling in its appeal against that verdict.

The Supreme Court ruling says that the test usually used to determine whether an invention was too obvious to patent – the "teaching, suggestion or motivation" test – was too tough.

The Court said the test was only ever a guide, not a hard and fast rule, and that it set the bar too high on obviousness. Its ruling will have the effect of making it easier to challenge patents on the basis that they represent an "obvious" improvement to existing technology.

"We are very encouraged by the Supreme Court's decision and the giant step it represents towards achieving much-needed patent reform in this country," said Jeffrey Citron, founder and interim chief executive of Vonage earlier this week. "The Supreme Court's decision should have positive implications for Vonage and our pending patent litigation with Verizon."

A court found in March that Vonage had violated three Verizon patents relating to the connection between its network and the main telephone network. It did not find that the violation was wilful, which would have involved a tripling of the damages.

The court ordered it to stop signing up new customers, an injunction which Vonage said could spell the end of the company. It argued that the rate of drop out and new adoption of VoIP services by customers means that a bar on accepting new subscriptions could irreparably damage the company.

It won first a temporary and then a permanent reprieve on that injunction, which is to be held off until the end of its appeal against the original verdict.

OUT-LAW.COM is part of international law firm Pinsent Masons.

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Posted Tuesday 8th May 2007 14:58 GMT

chaosvoyager

Not Knowing is Half the Battle

You know what's really bad? The more software patents you know about, valid or not, the more liable you can be held for infringing them in your programs. Legally speaking, your programmers should be as unaware of existing patents as possible.

At least in America.

You know what's worse? Software is about standards of communication and interface, and being able to restrict who uses it, so there's very little money in 'innovating' software. In fact, it's the only technology where we've gone BACKWARDS and are only now revisiting ideas we had in the 60's. Hell, we've had to bring obsolete computers out of cold storage to fight some of these patent suits:

http://www.sciam.com/article.cfm?alias=theres-history-and-money&chanID=sa025&modsrc=reuters

As a skilled programmer, I want to make money using my ability. But between the people willing to borrow my ideas for free, and the people willing to sue me into oblivion, I'm starting to wonder how.

Posted Sunday 6th May 2007 17:55 GMT

Lou Gosselin

Obviousness is not the solution

Yes, obvious patents should not exist.

(I won't get into how to define "obviousness")

However I would still disagree in principal with a software patent on an algorithm that was non-obvious.

My reasoning is simple. Given a specific problem any skilled programmer should be able to develope and use an algorithm whether or not the algorithm was obvious in and of itself.

It is extremely naive to claim that without access to the inventor's research (the patent application), that the rest of the world would be unable to duplicate the algorithm. Most likely a developer could duplicate it in less than a week and even be willing to release it as open source.

Keeping in mind that the ultimate purpose for a patent is to benefit the public by providing access to the inventor's research. Given that this research is no longer all that valuable especially for software, patents no longer seem necessary or appropriate.

In recent decades the purpose of patents has shifted away from "public benefit" and towards "protecting the inventor", in which case software patents could still be useful (to the detriment of the public).

Posted Sunday 6th May 2007 04:02 GMT

Lou Gosselin

Everyone's guilty of violating patents.

I agree with chris above, patents should not be held by corporations that seek only to profit by draining resources away from the true innovators.

Unfortunately non-IT people don't realize the ridiculousness of the patent situation.

A computer language/code is a form of expression which should be (at one point was) prohibited from being patented.

Those who program every day for a living solve problems as part of his/her job. It may or may not have been solved/patented before, but it makes more sense (is cheaper) to hire full time developers to solve the problem directly than it would be to hire a team to comprehensively research all the previous work and documents (patented or otherwise) to see whether or not any of it could useful, and then hire the developers anyways and then pay royalties on top. Once companies are slapped with an infringement case it may STILL be cheaper for them to reprogram around a patent than it would be to use it.

The overhead for software patents today is unmanageable even for large corporations. Luckily smaller entities are "allowed" to violate patents at least until they become successful.

You guys in the UK... what are you thinking moving to adapt software patents?? I'm around the world and it still keeps me up at night!