THIS COLUMN MAY BE ONE DAY WILL BE WRITTEN FOR EDIG (I HOPE SOON !)

Google Talk VoIP Services Alleged To Infringe Patents

Duane Morris LLP

By Eric Sinrod,

As technology companies become established and financially successful, it is not uncommon for smaller companies and individuals to allege that the larger companies have infringed and trampled on intellectual property rights during the rise to the top.

Many of these allegations lack merit, and do not go past the demand letter stage, or result in lawsuits that are dismissed before they have gained much traction.

Once in a while, the allegations stick. Indeed, as I have reported in this column, a small company called NTP, Inc. (NTP) obtained a substantial jury verdict against Research In Motion, Ltd. (RIM), the maker of the BlackBerry. NTP had alleged that RIM’s BlackBerry wireless email devices and services infringed dozens of NTP’s patent systems and methods. RIM has been fighting that jury verdict in subsequent legal proceedings ever since. Apparently, there have been settlement discussions between NTP and RIM, which could yield a significant payout to NTP.

Another small company, Rates Technology, Inc. (RTI), now seeks a sizeable recovery from the big kid on the block – Google, Inc. (Google). RTI has filed suit against Google in federal court in New York, arguing that during the past six years, Google has infringed two of RTI’s patents by way of Google’s marketing and selling of Google Talk VoIP services and related products. RTI seeks damages caused by the alleged infringement, including a tripling of lost profits and RTroyalties.I further requests a court injunction that would bar Google from further marketing and selling its Google Talk VoIP services and products.

The two patents at issue were assigned to RTI by the inventors and bear Patent numbers 5,425,085 (the 085 patent) and 5,519,769 (the 769 patent).

The Abstracts for the 085 and 769 patents describe them as follows:

“A device interconnects within the phone line coming from a first phone and routes telephone calls along a least cost route originating from the first telephone to a second telephone via the network. A housing forms an enclosure and has a first jack for interconnection to the phone side of the phone line and a second jack for interconnection to the network side of the phone line. The housing forms an enclosure which includes a switch for disconnecting the first phone from the network. The device generates a source of current through the switch to the first phone corresponding to the amount of current provided by the phone network. A database stores billing rate parameters for determining various communication paths of different carriers based on parameters such as the time and date of the call. Phone calls from the first phone are detected and stored. The database is addressed and a plurality of communication switch paths are identified as well as the cost rate of each path. The cost rates for each identified path are compared to determine a least cost route for the call. The device generates a number sequence corresponding to a desired carrier so that the dialed call is routed through the second jack and phone line to the selected communication path and carrier so as to establish a switched connection between the first and second phones.”

Thick stuff, eh? These types of patent cases are complicated as a matter of technology and law. Undoubtedly, Google will present various defenses to the patent infringement claims. Google might also try to paint RTI as a “patent trolling” entity – asserting that RTI has obtained numerous patents from others and uses them to litigate on a frequent basis, as has been reported. Google might argue that RTI improperly is trying to hold it legal hostage for purposes of trying to extract a major settlement.

However, to the extent that RTI truly has valid patent rights and Google Talk VoIP services and products infringe those rights, RTI might be able to gather a head of legal steam in its case, arguing that Google improperly seeks to grow even larger on the back of RTI’s patents. RTI could make that argument whether or not it has obtained other patents and has initiated litigation against other parties over time.

It is quite possible that this case will proceed to the point where Google ascertains if RTI’s case can survive past initial stages that could lead to dismissal of the case. At that point, if the case remains and is poised to go to trial, serious settlement talks could ensue, or RTI, like NTP in the BlackBerry case, might want to take its chances at trial.