The VoIP Patent Conundrum
By Joel Maloff
800 words
26 June 2007

Technology and its associated opportunities seem to have distinct and somewhat anticipated–if not predictable– cycles. This is especially the case in telecommunications and information technologies.

The process goes something like this: An innovation occurs. This may be something small and go by almost entirely unnoticed, or something announced with enormous fanfare. The innovation may labor in relative obscurity for decades and then suddenly reach critical mass, exploding into our consciousness.

Next, a generally small group of astute people take the risk to prove the concept. In dry times, this may be achieved by maxing out all the credit cards you can get or risking your personal assets. In headier times, gamblers are standing in line waiting to throw OPM (other people’s money) at the entrepreneur. The risk succeeds–sometimes quickly and sometimes over a few years. Nevertheless, the gamble pays off. A business and perhaps an industry are born.

Competition follows. Survival of the fittest. The winners will be those that best understand the ebbs and flows of the market, can plan accordingly, and execute effectively.

Maybe.

Lurking in the background may be the 21st-century version of “claim jumpers.” While the entrepreneurs and gamblers were risking potentially everything, those with large cash reserves and embedded market positions were quietly biding their time. Let the little guys “make the market.” It isn’t the skirmishes or the early encounters that win the war. Go for the high ground and wait for them to come to you. If they never get there, it doesn’t matter. Just a trifling investment with the double-edged sword of potentially crippling an adversary and making lots of money at the same time.

In the Industrial Age, it was easy to demonstrate–and therefore patent–what you claimed to have invented. You created a diagram and built a prototype to prove that it could work. That is much harder in the fields of software and communications. One man’s innovation is another man’s age-old technique. An overworked patent office cannot possibly test and confirm every patent that it awards, let alone every filing that is submitted.

That takes us into the realm of lawyers and the judicial system–the latter being another area that is taxed to its limits. Those with the deepest pockets–both to collect patents and enforce them–have the high ground. The innovators generally do not.

My musings have been triggered by the Vonage-Verizon court decision. I do not know if Vonage knowingly or unknowingly infringed on a patent. I do not know if Verizon honestly developed the technology itself or purchased it from someone who developed it. I do understand the complexities of IP telephony and am concerned that innovation via open standards may be reconsidered by the next wave of entrepreneurs. Why build something that could be snatched away, even after exhausting searches of “prior art?”

The Internet was to be the great level playing field. Working groups from IETF and other organizations have brought us standards that have proven far more effective than our old-style telephony standards.

Whether legitimate or not, the “opportunists” may have won this round. I am concerned that some of the results may be more patents being filed for the minutest modification of existing systems, start-up organizations needing to invest a considerably larger amount of money in patent filing and protection, and risk takers looking for less risky opportunities.

This is not the end of the VoIP boom but merely a “correction.” Innovation will not dry up any more than gold seekers who left the gold fields under the threat of claim jumpers. As in the past, however, innocence will yield to cynicism, and energetic innovators will be tempered by new realities.

The Internet has had an incredible impact on our lives–not just via our interconnectedness but also from the innovations it has incubated. So how do we navigate our way through this morass, giving credit to those who have earned it and ensuring the continued vitality of this wonderful organism? Change the patent process. Reject all those applications other than ones that are so clearly unique and groundbreaking that they cannot be denied. Allow the marketplace to determine survival of the fittest–not the lawyers and an ill-equipped judiciary. The U.S. House of Representatives Committee on the Judiciary, Subcommittee on Courts, the Internet, and Intellectual Property is currently considering patent reform. That’s a start.

Keep in mind that the Internet also belongs to the world. Should a single national judicial system have the ability to quash the innovations destined to benefit the world? Sometimes the pursuit of fairness turns out not to be fair at all. This challenge affects everyone, and especially those in communications and Internet. We need to carefully consider what future we would like to see.

Joel Maloff a former COO, CTO, and GM with 30+ years of experience focuses on emerging technologies and security. He can be reached at jmaloff@globaltouchtelecom.com.