Back in 2007, Verizon sued Vonage over three basic VoIP patents, and Vonage ended up settling for $120 million. It was a complicated story. Three US patents were involved: 6,104,711, 6,282,574 and 6,359,880. Verizon won that case, and was awarded $58 million plus a 5.5% royalty on Vonage’s future business. Vonage appealed, and the appeals court vacated the $58 million damages award and the 5.5% royalty. But it was on a minor point:
We hold that the district court did not err in its construction of disputed claim terms of the â€™574 and â€™711 patents. Therefore, we affirm the judgment of infringement with respect to those claims. However, we hold that the district court improperly construed one of the disputed terms in the â€™880 patent, and accordingly vacate the judgment of infringement with respect to the â€™880 patent and remand for a new trial… We vacate in its entirety the award of $58,000,000 in damages and the 5.5% royalty and remand to the district court for further proceedings.
But the case never went back to the district court! Verizon and Vonage had settled before the verdict, and under the terms of the settlement the verdict triggered a $120 million payment from Vonage to Verizon. Vonage went on to settle similar patent issues with AT&T for $39 million and Sprint for $80 million.
This year Verizon sued Cox on similar issues in the same court, Judge Claude Hilton’s court in the Eastern Virginia Federal District. This time Verizon lost. The jury found the claims of the ‘711 and ‘574 patents to be invalid, and Cox not guilty of infringing the others. Here is my summary of the claims that were found to be invalid:
US patent 6,104,711:
Claim 1 – A DNS (or similar) server translating an address based on a condition
Claim 3 – Like claim 1, where the condition is the status of an endpoint
Claim 11 – Like claim 1, where the condition is a query of an endpoint
US patent 6,282,574:
Claim 5 – Like 711.1, where the server returns a phone number (but no condition is involved)
Claim 6 – Like 574.5, where the server returns a phone number plus an IP (or similar) address
Presumably Verizon will appeal, but to this layman they seem unlikely to win. Their previous victory over Vonage was pyrrhic; the definitions returned by the Markman hearing in that case and the reasoning of the appeal court ruling broadened the scope of the patents to the extent that they encompassed a ton of prior art, as you probably expected when you saw the claim summaries above.
There are numerous patents covering VoIP, and numerous patent holders wanting a slice of the pie. James Surowiecki wrote a characteristically good piece on this type of situation in the New Yorker in August.