August 10, 2007 11:00 AM PDT

Week in review: Patent woes

After getting through funding, research and development, marketing strategies, and getting your product to consumers, here comes the hard part: navigating the patent storm.

Chipmaker Qualcomm was dealt another blow in its battle to dodge an International Trade Commission's ban on the importation of its advanced cell phone chips into the U.S. when the Bush administration refused to intervene. The ITC's decision, which was handed down in June, bans the importation of all cell phones using 3G chipsets from Qualcomm, because Qualcomm was found to have infringed on patents held by rival Broadcom.

But Qualcomm says it's not giving up. The company still maintains that Broadcom's patents are not valid. Qualcomm also said it is working closely with its customers and the operators on implementing new software that will provide a work-around to the patents.

And it said it's still working on an appeal and stay request with the Federal Circuit Court of Appeals. Last month, the appeals court said it didn't have jurisdiction in the case.

The ban would be particularly tough for all the major cell phone operators, which during the past several years have spent billions of dollars deploying their 3G networks. Public safety officials have also said that a ban on these new cell phones would hamper efforts to enhance 911 capabilities.

Another telephony player hit hard by patent problems is Net phone provider Vonage, which has been mired in a nasty patent battle with Verizon Communications and appears to be teetering on disaster as it struggles to sign up new customers. Vonage said it has completed the necessary work-arounds for the Verizon patents that a court found it infringes, but the legal drama has cost the company dearly in terms of recruiting new customers.

Vonage's legal troubles have no doubt scared off customers. During the quarter, Vonage added only 57,000 new customers. This is down dramatically from the 166,000 new customers it added in the first quarter.

What's more, Vonage, which had aggressively marketed its service by splashing banner ads all over the Internet and flooding television airwaves with commercials, has pared back its advertising budget to reduce costs. For the second quarter the company spent just $68 million on marketing, down from $91 million in the first quarter.

While many CNET readers complained about Vonage's voice quality and customer service, a few readers praised the Internet phone service.

"Vonage has done a lot to spread the word about VoIP, offers some solid service and deserves a chance to grow," wrote one reader to the TalkBack forum. "I never invested in Vonage and am only a customer, but would miss the service if it were forced to close."

Meanwhile, Microsoft won a reversal of a $1.5 billion jury verdict against it for infringing on a patent for MP3 technology held by Alcatel-Lucent. A judge tossed out the damages after finding that a jury improperly ruled that Microsoft infringed on one of two patents at issue for MP3 sound technology. The new ruling holds that one of the patents in the case was not actually owned outright by Alcatel-Lucent, and since Microsoft had a license to that particular patent through its co-owner, it's off the hook.

Apple's summer harvest
Apple introduced two new iMacs and unveiled updated software for home Mac users. The 20-inch and 24-inch iMacs are the latest editions of Apple's all-in-one iMac design. They are made from aluminum and glass, and come with a new keyboard. Both the new keyboard and the iMac itself are thinner than the previous edition. Click here for a full review of the new 20-inch iMac.

See more CNET content tagged:
Vonage Holdings Corp., patent, Qualcomm Inc., ban, Alcatel


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Silly name...
Although this is a trivial comment, I would like to know who coined
the term Telephony? I presume that it is an acronym for the longer
form TELEPHONe industrY. I just think it a silly abreviation and
rather "romper-roomish" in execution.

Who every thought that this would be a good industry name has
been spending too much time with infants.
Posted by Jim_Mattos (69 comments )
Reply Link Flag
"Telephony" is a term, not an acronym or shorthand. It refers to a whole host of voice communication protocols and methods.

See for yourself: <a class="jive-link-external" href="" target="_newWindow"></a>
Posted by Penguinisto (5042 comments )
Link Flag
Here's more IP news fresh off the press:
SCO just lost its butt in court over its little round of frivolous lawsuits (which means Linux remain blissfully free of any credible IP theft charges):

<a class="jive-link-external" href="" target="_newWindow"></a>

Posted by Penguinisto (5042 comments )
Reply Link Flag

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