Vonage Sues AT&T

You say tomato, I say toh-mah-toe. It all comes down to pronunciation, you see.

Well, a promising start-up in the voice over Internet protocol (VOIP) services space didn't take too kindly to Ma Bell playing rhymes when choosing a name for its own VOIP service. Privately held Vonage slapped AT&T (NYSE: T  ) with a lawsuit for referring to its newly launched VOIP service as CallVantage. The company claims that the name sounds a little too close to Vonage.

The association of the two service names is not all that Vonage is concerned about. Apparently, AT&T has also reserved the Web address www.callvontage.com (no, that's not a typo) and several similar names that are almost indiscernible from the start-up's own site, www.callvonage.com. The company claims that AT&T is diluting its trademark and harming its business by purposely confusing potential customers.

Vonage derived its own name from a popular acronym that generally refers to VOIP services: voice on the 'Net (VON). Vonage literally stands for "The age of voice on the 'Net" and was a company spawned early in 2001 by an elite group of Internet visionaries.

The lawsuit comes at a critical point as competition in the VOIP sector is heating up. Vonage and several other early movers, such as 8x8 (Nasdaq: EGHT  ) and deltathree, have carried the torch in the early stage of the race to offer VOIP calls for the masses. But in the last six months, the major telecoms, such as Verizon, SBC Communications, and AT&T, have announced their own suites of VOIP services.

Companies in the sector that sell advanced equipment and software that enables voice-calls-over-data networks are in a similar nascent stage. Smaller players Sonus Networks (Nasdaq: SONSE  ) and Tekelec are jockeying for position against equipment giants Nortel Networks (NYSE: NT  ) , Lucent (NYSE: LU  ) , Cisco Systems (Nasdaq: CSCO  ) , and Juniper Networks (Nasdaq: JNPR  ) .

The stakes are high as sales of next-generation equipment and services are increasingly displacing what is now quickly becoming legacy gear and offerings. In this game, any little competitive edge counts, especially for those rising against the establishment. And in the area of consumer services, a strong brand goes a long way, so Vonage is wise to protect it.

Tom Gardner spends his days searching for the next undiscovered, undervalued small company inMotley Fool Hidden Gems. Take a free, 30-day trial to learn more.

What Fool contributor Dave Mock wouldn't give to have been a fly on the wall when they thought up and branded Clamato -- tomato juice mixed with clam juice. Mmmmm. He owns shares of Lucent, but no other companies mentioned here.


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