Sprint Finds Cash in Patent Filings

Like finding a $20 bill in your coat pocket at the beginning of winter, Sprint has “found” a potential source of revenue in its patent portfolio. While it will certainly be harder than reaching into a coat pocket, the beleaguered wireless carrier probably sees patent litigation as easier than its corporate turnaround.

After squeezing $80 million out of Vonage last year, Sprint has apparently decided that its 115 “voice over packet” patents might be its next cash cow. The carrier says it will sue four smaller phone companies — NuVox Communications, Broadvox Holdings, Big River Telephone Co. and Paetec Communications — for violating six of its patents associated with delivering voice over a data network. It is seeking damages and an injunction. Interestingly, the carrier didn’t try to negotiate with the providers before dropping the L-bomb on them. All of the carriers said they were reviewing the lawsuit and couldn’t comment at this time.

Considering that these six patents have been tried in the courts thanks to Vonage, Sprint is in a much stronger position when it comes to getting a licensing deal, which makes the fact that Sprint chose to go with a lawsuit interesting. It’s likely that when presented with the patent violations and a reasonable license fee, the companies could reach some common ground. Another VoIP company, VoiceGlo, was sued in 2005 along with Vonage, and negotiated an undisclosed license with Sprint covering its use of the patents.

That means Sprint is either going for the injunction (to shut down its competitors), or it is taking them to court in an effort to weaken them (by way of scoring a larger financial settlement). Either way, Sprint is playing hardball — and it isn’t alone.

After successfully coaxing a $120 million settlement out of Vonage last year, Verizon Communications is also asserting its VoIP patents against a competitor. Earlier this month, Verizon sued cable operator Cox Communications for infringing eight patents. Two of those patents are the same ones Verizon successfully defended against Vonage. Vonage may have had to pay millions, but it looks like the power its loss gives the incumbents might keep independent VoIP players paying for years.