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Verizon Sues Charter Over VOIP Patents

Raymond McConville
LR Cable News Analysis
Raymond McConville
2/8/2008
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Verizon Communications Inc. (NYSE: VZ) has sued yet another service provider for patent infringement related to the intellectual property behind the transmission of VOIP calls. This time the victim is Charter Communications Inc. . The suit was filed Tuesday in a federal court in Texarkana, Texas.

Verizon has already successfully sued Vonage Holdings Corp. (NYSE: VG) for patent infringement and recently filed suit against Cox Communications Inc. (See Vonage Settles With Verizon and Verizon Sues Cox.) Just as in the Cox suit, Verizon is claiming that Charter infringed upon eight different patents -- four of which were tried in the Vonage case, with the court ruling in favor of Verizon on three of them.

Like the other cases, Verizon has asked for unspecified monetary damages and a court injunction blocking Charter from using the technology in the future. What's different in these latest two cases is the four new patents being brought to court. Some of the new patents deal with quality of service -- something Vonage isn't all that concerned with.

Additionally, in the Vonage case, Vonage was merely infringing upon the patents at hand; Cox and Charter are supposedly going so far as to invest money and develop networks based on the technology.

It's no secret that Verizon has steadily been losing wireline voice subscribers on a number of competitive fronts. It lost 8 percent of its primary access lines in 2007, much of that due to cable VOIP competition. This raises the question of whether Verizon plans to take more cable MSOs to court in order to thwart further line losses.

On the surface, it would appear that it is capable of doing this. All cable MSOs use the same basic PacketCable architecture for completing VOIP calls. If one is guilty of infringing Verizon's patents, it's conceivable that the others are as well.

"I would not be surprised if that's their strategy," said Fred Grasso, an attorney with Pillsbury Winthrop Shaw Pittman LLP's intellectual property practice and a VOIP patent expert. "An overarching theme is that it seems Verizon is picking patents that are essential to providing VOIP service."

Grasso says all eight patents in the Cox case deal with systems and methods. Methods patents detail steps that are performed in completing VOIP calls. "If this method requires steps that are performed by multiple companies then it's very difficult if not impossible to not have that claim infringed," says Grasso. It is the systems patents that cover an exact specific system that can more easily help you make claims against a specific entity like Cox.

Grasso says Verizon has brought both these generic methods-type claims and specific systems claims against Cox. Having already successfully tried four of the eight patents against Vonage, Grasso says that it could be testing the four new ones before maybe going after others later on.

Meanwhile, Charter says that they "are presently analyzing Verizon's claims and our defenses and can't comment on it at this time. Charter intends to vigorously defend itself in this suit."

The other cable MSOs are certainly aware of what Verizon is up to. Comcast Corp. (Nasdaq: CMCSA, CMCSK) for example, has acknowledged that it is aware of the suits but has not yet responded to requests for comment on its own potential vulnerability to a lawsuit.

The risk is there though. The Verizon patents in question are curiously vague. "They're not drafted to cover specific architecture," says Grasso. "There is a risk then that the larger providers are prone to this."

The district courts of Texas and Virginia (where the Cox suit is being tried) are known to work very quickly, so both of these cases could be over relatively quickly.

— Raymond McConville, Reporter, Light Reading

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