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Vonage Sues AT&T Over Internet Phone Service
WASHINGTON (Reuters) - Internet phone company Vonage Inc. has sued AT&T Corp. over the long-distance company's new Internet-based phone service, saying AT&T's "CallVantage" name was too close to Vonage's brand name.
The move suggests the tough competition forming in the market for phone service over broadband Internet connections, as larger firms such as AT&T and Verizon Communications Inc. stake their claims in a business that smaller companies like Vonage have had mostly to themselves until now.
AT&T, the largest U.S. long-distance company, said on Monday it was launching its Internet-based service called CallVantage, with parts of New Jersey and Texas covered now and a goal of offering the service in 100 markets by the end of the year.
But in a lawsuit filed last week in New Jersey, Vonage claimed AT&T was trying to confuse potential Vonage customers with the CallVantage name. Vonage also claimed AT&T bought several Web addresses with "vontage" in the name, such as "callvontage.com," which are too similar to Vonage's "callvonage.com" address.
Vonage asked the U.S. District Court in Trenton, New Jersey, to force AT&T to change the name of its service, saying CallVantage would confuse customers and weaken Vonage's trademarks.
"Instead of developing its own fanciful mark, AT&T embarked on what appears, unfortunately, to be a calculated scheme to trade on the goodwill of Vonage's fanciful and distinctive VONAGE mark," the lawsuit says.
AT&T has not yet filed a reply with the court. An AT&T spokesman said the suit was "without merit, and we believe we'll prevail in court."
While the market for voice-over-Internet protocol, also known as VOIP, is still only a few hundred thousand users, analysts expect the number to grow rapidly as more phone and cable companies offer the service to the nation's 21 million households with broadband Internet connections.
Much of that growth is expected to come at the expense of traditional phone companies, several of whom have promised to roll out their own voice-over-Internet service. Last week, debt rating agency Standard & Poor's cited competition from cable companies as a major reason for its decision to put Verizon's ratings under review for a downgrade.
In a talk to a analyst conference on Tuesday, AT&T Chairman and Chief Executive David Dorman said broadband companies had little to offer customers outside of faster download speeds, but could draw more subscribers with voice services.
VOIP "may be the killer app that broadband is looking for," Dorman said.
(With additional reporting by Reed Stevenson in San Diego)
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