Telecommunications Patent Lawsuits in Perspective at COMPTEL

As anyone knows who has followed Vonage Holdings Corp.’s losses in patent litigation with AT&T Inc. and Sprint Nextel Corp., being a VoIP provider means negotiating a mine field of intellectual property considerations. Object lesson No. 1: violation of VoIP patents, unwitting or not, almost brought Vonage to its knees.

And it’s not just Vonage who has felt the burn. From the “how far does the rabbit hole go” file: High-profile patent lawsuits include Rates Technology vs. Google Talk and Apple Inc. vs. Cisco Systems Inc., not to mention a veritable spree of litigation from Verizon Communications Inc., which also plumbed the Vonage well before going on to sue everyone from startup VoIP Inc. to cablecos like Cox Communications and Charter Communications.

What it all means for COMPTEL attendees is the subject of today’s panel discussion, staffed by three patent law experts.

“This is meant to be an informative panel, with two patent attorneys speaking about the risks and strategies related to patent protection and what steps can be taken for reducing exposure to risk,” said moderator Bill Wilhelm, partner at law firm Bingham McCutchen LLP.

The panel will run down a list of who’s been active in lawsuits, and then dig into some specific cases, like that of Sprint, whose patent covers a specific implementation.

Patents can be used as a defensive tool or offensive weapon, said Wilhelm. “It's clear there are a number of entities holding patents and using these to extract monies from others. But there are also some who are rightly protecting their intellectual property and trying to maintain their position in the marketplace.”

“There are patent trolls out there, little guys that don't have a business but have patents and are threatening people,” added panelist Barry Goldsmith, an attorney at the Womble Carlyle firm. “Then there are the bigger guys like Verizon, where VoIP might be a threat to their business model and they want to shut out the competitor.”

It’s something of concern for companies of all sizes. “We’re at the point now where relatively small telecommunications companies have me looking at patents,” said Goldsmith. “Either they've been threatened or the board is nervous and wants to know, are we going to get sued next. You just have to take a look at the technology of what others are holding patents on and see if it's a match with what you're doing.”

The panel also will cover strategies for early-stage companies. “It’s a good idea to identify what unique technologies you have and protect them, for the purposes of having a defensive weapon if, in fact, you're ultimately sued,” said Wilhelm. “It does take several years for patents to ultimately be vetted, which is a real disadvantage for younger companies.”

One consideration in looking at patents is that VoIP is often but one component of them. “Patents read on all sorts of technology — one might cover Web access to your telephony control panel, for example,” said Wilhelm. “Or it could be about VoIP in an automated PBX system. Because of this, you can often make a minor adjustment in your technology and you can clearly avoid infringement.”

In fact, there’s somewhat of a misconception about the risk, says Goldsmith. “Yes, there are Verizon patents, Sprint patents and others, but they're not as broad as you might have read that they are,” he said. “They actually tend to be more narrow and focused on specific areas.”

Companies should look at the technology they are using and the implementation, to really see if they’re at risk. “You still might get sued, because you can't prevent someone suing you, but you're not going to lose,” said Goldsmith.

“These patents are actively litigated and enforced,” said Wilhelm. “Five to 10 years ago you couldn't get most companies in the wireline business interested in patents — but now the convergence of the Internet, software and equipment have made it necessary.”

Rob Bertin, another partner at Bingham McCutchen, also will join the discussion.

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