The High Cost Of Innovation: Vonage’s Patent Woes

Vonage's Marketing Campaign May Fizzle Out

Vonage will be in court again tomorrow defending itself against Verizon’s claims of patent infringement. The innovative VoIP company had lost the trial and was ordered to pay $58 Million in damages in early March, when a jury found them to have violated thee of seven related patents held by Verizon. Vonage appealed of course, but it’s uncertain if the company, which has yet to turn a profit, has the stamina for a drawn out battle. The company’s annual 10-K filing painted a stark picture of the challenges Vonage faces (NPR coverage).

The best news for Vonage so far came on April 6, when an appeals court temporarily lifted the injunction that would have forced them to cease operations. And tomorrow the company will face an appeals court in a case that could make or break the company.

I’m among those that’s been saying patent law is broken, and cases like this are a perfect illustration of how laws that were meant to encourage innovation are instead used to protect the establishment. (Take a look at Article I Section 8, where it speaks of promoting “the progress of science and useful arts.”)

The Software Freedom Law Center‘s Eben Moglen says Verizon filed for the patents in 1997 specifically so that it could use them as ammunition against the then developing but not commercialized VoIP technology.