Clash Over VoIP Patent Claims

Acceris Communications Inc. and

ITXC Corp. are suing each other over intellectual property related to Internet telephony.

First, Acceris claimed ITXC’s services and systems infringe on its U.S. patent “Method and Apparatus for Implementing a Computer Network/Internet Telephone System.” ITXC then filed a lawsuit against Acceris, alleging infringement of five of ITXC’s patents related to the transmission of phone calls over the Internet and the completion of calls by switching them off the Internet and onto the public network.

Stephen Weintraub, senior vice president and board secretary for Acceris, says Acceris approached a number of companies thought to be using its patented technology and asked them to enter a licensing agreement. He says ITXC refused. An ITXC press release says the company “intends to vigorously defend against the allegations of infringement in that case and believes it has substantial defenses to them.”

Acceris had not filed lawsuits against other companies on similar grounds as of mid-summer, Weintraub told PHONE+. “We have not gotten anybody who’s approached us about a licensing agreement. It looks like we are going to have to deal with everybody on a one-on-one basis right now,” he says.

David Silverman, senior vice president and general counsel with Acceris, declined to comment on the status of the lawsuits, citing company policy against commenting on pending litigation.

Teleglobe, which recently acquired ITXC, did not respond to a request for comment on the status of the cases.

Michael Glenn, a patent attorney based in Menlo Park, Calif., says 2 percent to 4 percent of patents are the subject of litigation. “Litigation isn’t that common. That’s because it’s so expensive,” says the attorney, who notes a lawsuit can cost millions of dollars. “People don’t litigate that often and when they do litigate they often will settle because the process to the end also is very daunting.” Glenn adds companies are cautious because they risk being countersued.

Greg Kirsch, a shareholder with the law firm of Atlanta-based Needle & Rosenberg, says patent lawsuits involving the Internet appear to be on the rise. He cites lawsuits filed against eBay Inc. and Microsoft Inc. In January, a federal judge affirmed a $521 million judgment against Microsoft for infringing on patents held by the University of California and Eolas Technologies Inc. “There seems to be an increased number of lawsuits involving Internet-related patents of all sorts, not just Internet telephony,” he says.

In patent lawsuits, the outcome of a court proceeding known as a Markman hearing could determine whether the plaintiff or the defendant has a strong case, lawyers say. Under a Supreme Court ruling, a judge now determines the scope of what is covered by a patent. “That can make or break a case right there,” Kirsch says.

“Oftentimes, the parties will know better … how they stand.” U.S. patents have a history dating back to the presidency of George Washington. More than 6.7 million patents have been granted since 1790, the year the first patent was issued for potash, an ingredient used in soap and fertilizer, according to the U.S. Patent and Trademark Office.

A patent gives the inventor the right to exclude others from making, using, selling or importing anything covered by the patent, says U.S. Patent and Trademark Office spokeswoman Brigid Quinn.

Last year, the U.S. Patent and Trademark Office received 41,528 patent applications pertaining to communications-related technologies, according to Quinn. She says the government approves a patent in the communications field on average 36 months following the application.

That compares to an average of 26 to 27 months for all technologies.

Quinn says the applicants must meet four criteria to get a patent: The invention must be new; it is not obvious to someone skilled in that technology; it is something that has a function or a use; and the invention has to be disclosed in writing so someone skilled in that field would be able to make and use it. The majority of applications for patents are rejected at first, Quinn says, but about 70 percent of applications mature into patents after the applicants make adjustments.

Attorney Glenn says some patent holders don’t operate a business related to the patents.

Instead, they seek to license the patents to numerous other companies - and may file lawsuits.

This can be problematic for a company being sued, Glenn says, because it can not strike back with a countersuit if the original plaintiff does not operate a business that could be violating patents.

Newcross Technologies, a VoIP communications equipment provider based in San Mateo, has numerous patents approved and pending, says Jeff Durtschi, CEO of Newcross Technologies.

Durtschi says the company has sought the patents to “protect ourselves in the marketplace and give our customers confidence.”

“We are not in the business of … prosecuting our patents against others as a source of revenue,” he says.