Telcordia's Softswitch Timebomb

The legal teams of the world's softswitch vendors are about to earn their money. Telcordia Technologies Inc. says it's been awarded a softswitch architecture patent that could enable it to claim back-dated license fee payments from the world's VOIP system vendors (see Telcordia Claims Softswitch Patent).

Telcordia says it has been awarded a U.S. patent for "its method and system for media connectivity over a packet-based network" that, it says, is "critical to the delivery of Voice over Internet Protocol (VoIP)."

It says the patent, which "addresses methods associated with the origination and termination of packet-based media connections inherent to today's evolving telecommunications networks," covers not only VOIP, but voice over ATM, video conferencing, data transfer, and video downloads.

The company says the patent stems from developments covered by a patent claim it filed seven years ago. A Telcordia spokeswoman says the firm filed for a provisional patent in December 1997 and filed the complete patent application a year later, within the set timescale allowed by the patent office.

In an email response to questions, she says the "patent embodies 12 claims that relate to core architectural aspects of softswitch systems," and that Telcordia is "analyzing the patent to determine its applicability to existing products."

Once it has done this, it will decide whether to ask softswitch vendors to pay back-dated license fees for their existing systems.

Telcordia's press release notes that the patent and the "associated intellectual property" are "available immediately" for purchase or licensing. The spokeswoman says softswitch vendors are "best situated to understand whether their products might require a license to the patent."

And what would a license cost? Telcordia won't commit to any sort of price range, saying just that each one would be different, "to meet a particular licensee's needs."

None of this news can make easy reading for the growing list of companies marketing their softswitches to the world's network operators as the VOIP craze sweeps the globe. Perhaps unsurprisingly, given the rather sensitive nature of Telcordia's claim, the vendors we contacted for feedback declined to comment. Sonus Networks Inc. (Nasdaq: SONSE) considered commenting but then thought better of it, while Marconi Corp. plc (Nasdaq: MRCIY; London: MONI), which has had its softswitch chosen for a high-profile BT Group plc (NYSE: BTY; London: BTA) trial, said it was a matter for its intellectual property team and lawyers (see Marconi Softswitches With BT). Nortel Networks Ltd. (NYSE/Toronto: NT) failed to respond to requests for comment.

Those firms are just a few of the major names pushing the softswitch story to carriers just now. Other leading suppliers include Alcatel SA (NYSE: ALA; Paris: CGEP:PA), Cisco Systems Inc. (Nasdaq: CSCO), LM Ericsson (Nasdaq: ERICY), Lucent Technologies Inc. (NYSE: LU), and Siemens AG (NYSE: SI; Frankfurt: SIE), all of which already shell out millions of dollars to Telcordia to put their telecom systems through the Osmine process (see Will RBOCs Undermine Osmine? and Telcordia's Osmine Gold Mine).

What's behind the sudden move? It's simple: Telcordia is looking to boost its flagging revenues -- down from $1.44 billion in fiscal 2002 to $892 million in 2004 -- by any means.

And Current Analysis senior analyst Joe McGarvey says Telcordia's "primary goal is to recoup the investment the company has made in developing softswitch technology, a figure that [Telcordia] officials say is in the hundreds of millions of dollars range."

So will the company be asking other vendors to cough up? "It's established that the company has a legal right to collect licensing fees from some softswitch vendors. I imagine that Telcordia will recoup as much of its investment as it can." But McGarvey believes the software giant will consider the impact of any such move. "It's certainly not beneficial to Telcordia to use the patent to impose any sort of financial constraints on the development of the softswitch industry. If Telcordia does have any legal claim, I'm sure the company will balance the potential financial gain with the need not to restrict further advancement of the technology or the development of the industry."

— Ray Le Maistre, International Editor, Boardwatch

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fbgboy 12/5/2012 | 1:32:50 AM
re: Telcordia's Softswitch Timebomb All the people slagging them for being antiquated, who saw this coming?
How amny legs will be broken jumping on and off the Bandwagon. Thsi round goes to them.
Truelight1 12/5/2012 | 1:32:36 AM
re: Telcordia's Softswitch Timebomb They have acquired the Telcordia Softswitch


What does this mean ?
stephenpcooke 12/5/2012 | 1:32:36 AM
re: Telcordia's Softswitch Timebomb I wouldn't give in to them quite so quickly...

How many of these patents actually bring in money? For example, Nortel owns the Self-Protecting Ring (SPRING) patent (covers both UPSR & BLSR architectures), Fujitsu's partner Sumitomo owns the laser modulator patent, Lucent owns a bunch of others that have to do with current telecom systems, etc. There will be legal posturing on all sides. The interesting point here is that Telcordia is NOT an equipment provider. This basically means that the usual tact of "we won't exercise our patents in this area if you don't" doesn't apply. One thing that most techies don't understand, particularly in startups, is that one of the main reasons why VC's want some cool Intellectual Property in their investments is so that they have some protection against the Nortel's, Lucent's, etc. in case the startup pisses them off. Otherwise the big guys can pound any interesting startup into the dust by simply exercising their patents (Motorola was particularly effective in this approach. They killed several startups this way so that they could acquire them for peanuts).

You can bet your house that every legal team in every VoIP supplier will be working on this (and looking for loopholes) damn fast. Telcordia has never been known as a cheap player so licensing costs could be bad.

I thought that there were some 'rules of thumb' (or perhaps etiquette...) that had to do with not charging licensing fees on technologies/architectures that are key points of major standards. Perhaps someone in the IP domain could comment...?
enews_pbx 12/5/2012 | 1:32:29 AM
re: Telcordia's Softswitch Timebomb Would appreciate if I could get a ballpark on the cost of a softswitch vs. a class 5 switch.

PO 12/5/2012 | 1:32:07 AM
re: Telcordia's Softswitch Timebomb This article would appear to be referring to US Patent number 6,724,747.

It will be interesting to see what becomes of this, with the likely outcome being that only the lawyers and consultants will become rich: many arguments might be expected about the validity of the patent (versus prior art, for example) and its applicability to any specific implementation (is it so narrowly written as to cover only a particular softswitch, or so broadly written as to be a patent of an idea instead of an invention). Or, conceivably, if any of this work (or its cited precedents) have been touched by the GPL or a similar public-use license, preventing commercial enforcement of the patent.

And, of course, this applies to a great many patents; Telcordia is by no means alone in this.

IP needs to be protected, but many questions remain as to how to keep it all from getting out of hand. Bell patented the telephone; he didn't patent telephony.
dwdm2 12/5/2012 | 1:32:06 AM
re: Telcordia's Softswitch Timebomb Many patenting process is so much litigious that, in fact, it is a fertile breeding ground for further litigation. If it is an 'invention' it should not need a group of legal staff to make it stand. IMHO inventors should write their own patent... Only a rare few does that now, primarily because thay can't afford the attorney fees. Big corps sometimes spend significantly more after the attorneys than the invention.
alchemy 12/5/2012 | 1:31:53 AM
re: Telcordia's Softswitch Timebomb enews_pbx asks:
Would appreciate if I could get a ballpark on the cost of a softswitch vs. a class 5 switch.

It's apples vs oranges. The softswitch is only the control part of the solution. To do all the features of a class 5 switch, you also need a bunch of media gateways and signaling gateways. To do specialized functions like lawful intercept, conferencing, recorded announcements, voice mail, firewalls... you need other boxes. By the time you've assembled all these discrete boxes, your costs are not too far off from the cost of a next generation class 5 switch. Figure somewhere in the range of $25 to $100 bucks per subscriber. The softswitch part is only a small part of that cost.
alchemy 12/5/2012 | 1:31:53 AM
re: Telcordia's Softswitch Timebomb > They have acquired the Telcordia Softswitch

Telcordia has been trying to unload that business unit for years.

NewCross also acquired the steaming pile that used to be Tollbridge. They now have a somewhat obsolete media gateway product that was originally targeted at the non-existant IPDT market (VoIP to GR-303/V5.2 to a legacy Class 5 switch) and a softswitch. To be a player in the class 5 market, you really need to have a complete vertical integration since no end user is going to try to tackle integrating piece parts to make a telephone network. On paper, this looks like a smart move since NewCross now has two critical pieces of the integration puzzle. Sadly, the Telcordia product is written in Java. I doubt Sun will make a Netra fast enough to let that thing get out of its own way for another 10 years.

I question the long term prospects of a company run by a VC that buys up on the cheap a bunch of bad ideas that were executed poorly.

materialgirl 12/5/2012 | 1:31:50 AM
re: Telcordia's Softswitch Timebomb RMBS is the bad-boy of the "secret IP-as-standards" strategy. RMBS management sat on some committee that standardized on a memory bus architecture at the same time they were applying for patents on the same technology. Once the standard got passed, and (I think) INTC standardized on it, RMBS made it their business to sue everybody who had adopted it. Needless to say, the industry has been in one big lawsuit over this for years.

While clearly sleazy, and couter to the intent of any standards group, the legality of their trick has been tested and seems to be legal, if not ethical.
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