Former Vice President Al Gore claimed he invented the Internet (or maybe it was the information superhighway?), and now Sprint Nextel
This is obviously terrifying for traditional telecom carriers such as Sprint Nextel, and this week, the company filed a lawsuit against several top VoIP companies such as Vonage and VoiceGlo. Sprint Nextel alleges that the defendants have infringed on seven of its patents, and it is seeking damages (which have yet to be specified) and an injunction.
Is there a valid claim here? It's a complex area, and no doubt both sides will be able to find experts to defend their positions. Ultimately, a court will make the decision (if it goes to court at all). Some VoIP experts, such as Jeff Pulver, are not impressed with Sprint Nextel's claim. According to Pulver: "When I read about this lawsuit, the first thing that came to mind were the claims that BT
Sprint Nextel said it tried for the past year to enter a licensing agreement with Vonage and VoiceGlo. But as is usually the case with intellectual-property issues, it was a nonstarter. (VoiceGlo indicated that Sprint Nextel's lawsuit is baseless.)
Of course, Sprint Nextel wants to do whatever it can to preserve its margins. And if filing a lawsuit can help, why not? After all, Vonage and VoiceGlo are relatively small, and the costs and distraction from the lawsuits will likely have a greater effect on them than on Sprint Nextel.
The chances of Sprint Nextel getting an injunction are quite slim -- judges want very good reasons before they shut down businesses. Besides, litigation takes a long time. By the time the case reaches trial, there are likely to be new upstarts threatening the incumbents.
Still, lawsuits don't get investors all that excited. The fact is that with new technologies and new players in the market, the margins for players like Sprint Nextel have only one direction to go -- down. The simple fact is they're in a very difficult position -- technological advances in the VoIP realm erode their more profitable businesses, while ignorance leaves them treading water and slowly sinking.
Fool contributor Tom Taulli does not own shares of companies mentioned in this article.