I've long thought the "business method patent" to be one of the biggest shams involved, and I am neither alone in this opinion or innocent of involvement in the scheme. Essentially, business method patents protect the manner of doing something; for instance, you might be able to patent your unique way of sorting envelopes. "I start by separating the colored envelopes from the white ones, and then sort by size," you might say. "Then I alphabetize each stack according to addressee first name."

As of yesterday, your patent would be denied. The Court of Appeals for the Federal Circuit handed down a ruling in the Ex Parte Bilski case that would severely limit software and business process patents, essentially requiring that these patents only be approved if the patent in question (1) is tied to a particular machine or apparatus, or (2) transforms a particular article into a different state or thing.

If this is upheld by the Supreme Court (which I tend to believe it would be), this will have far-reaching ramifications for technology companies like Amazon (NASDAQ: AMZN), which have protected a simple process (the One-Click ordering system) that is only an idea, not a machine. I've always found the concept that ideas could be patented to be noisome; taking the One-Click as an example, it is certainly not an idea that only one individual could ever conceive, and it's stifling to keep other competitors from using it. In my opinion, competition should exist based on the excellence of products and services and the development of brand identity, not on legal protectionism. Jeffrey Bezos may not agree ...

Billboard reported yesterday that Radiohead and long-time publisher Warner/Chappell Music, a division of Warner Music Group (NYSE: WMG), have created "a unique 'all rights' digital licensing service for the alternative rock band's new album In Rainbows." This arrangement is in anticipation of the upcoming physical release of the album, following the two months it was available on a special website set up by Radiohead, which ended yesterday.

According to Billboard, Warner/Chappell set up a "global one-stop shop" which allows potential rights users to acquire the rights to the album from one location. In queue with Radiohead's initial decision to release the album without the music labels, this "one-stop shop" effectively removes those same entities from the rights process and keeps direct control with the band and the publisher. Jane Dyball, the senior VP of Warner/Chappell for European legal and business affairs, told Billboard that the arrangement is an "'experimental solution,' which should benefit Radiohead while 'providing all their licensees with a new, highly flexible service.'"

No doubt, Facebook is one of the internet's hottest startups. The company has raised gobs of venture capital, has deals with companies like Microsoft (NASDAQ: MSFT), and is often rumored to go public or be bought out.

The company's founder, Mark Zuckerberg, is just in his early twenties, fresh from Harvard. Over the past few months, several of his recent classmates have made claims that they are the real owners of the Facebook concept.

Such disputes are very common for early stage companies. And it's also common for these companies to be sloppy in protecting themselves from legal claims.

So what can be done?

How does a company like Microsoft (NASDAQ: MSFT) keep huge numbers of people in countries like Indonesia and China from using pirated copies of its software? According to Craig Mundie, Microsoft chief research and strategy officer, for now, there is little the company can do. He told Reuters: "We are realistic in recognizing that we have to work diligently over periods, that are really a decade or two, to make real progress in a number of these environments."

That means that tens of million of copies of Windows could easily bring Redmond not a single dime. It also means that the company is relying on local officials to support anti-piracy laws. Policing such large populations really isn't possible.

But, Mundie may be acting a bit cute. In all likelihood, the answer for thwarting pirates has nothing to do with laws and police. Microsoft and other large software companies are almost certainly working diligently to make ripping and copying software much more difficult. They would at least have as a goal putting in a set of systems which would disable may of the software's features if copying were attempted.

If selling a version of Window in China yields $100 and there are, say 20 million copies of pirated versions distributed per year, it add up to real money, even for Microsoft. Odds are that the problem is solved through programming and local laws to prevent stealing be damned.

Douglas A. McIntyre is a partner at 24/7 Wall St.

The news hasn't been good for Qualcomm Inc. (NASDAQ: QCOM) lately in its myriad lawsuits with Broadcom. Its most recent setback occurred in Santa Ana, California as the San Diego company lost a dispute with Broadcom Corp. (NASDAQ: BRCM) over three patents that Qualcomm has now been declared as willfully infringing. The news came on the heels of an expected ITC resolution (that was again delayed, this time to June 7) on whether to ban phones containing Qualcomm's chipsets that have been determined to violate another Broadcom patent.

This most recent case centered around five patents that Broadcom acquired and then asserted against Qualcomm. By the end of the litigation phase, Qualcomm was found to infringe upon three patents broadly covering topics of video encoding, network management, and hierarchical networks. Broadcom was awarded $19.6 million in damages, but this value could be tripled as the infringement was determined to be willful.

With no compromise yet reached on a licensing deal to cover the extent of products that Broadcom sells, the company has been methodically attacking Qualcomm's intellectual property base. Both Broadcom and top handset supplier Nokia Corp. (NYSE: NOK) hope to demonstrate legally and in the court of public opinion that they deserve more equal footing with Qualcomm in terms of intellectual property, and should not have to pay significant royalties to Qualcomm.

With the additional leverage, though minor, that Broadcom is achieving through court victories, I wonder at what point it makes sense for Qualcomm to buy Broadcom outright, or conclude some sort of merger. While there may be obstacles or egos in the way, I think Broadcom would be a good compliment to Qualcomm's strategy of becoming more than just a kingpin in the cellular and CDMA markets. Both companies are organized around an elite engineering core with proportionally more advanced degrees in their ranks than many other tech companies, aligning their core R&D centers.

Should the two companies take off their gloves and come to terms of even a strategic partnership, it will go a long way towards helping Qualcomm fend off Nokia and the rest of the industry that wants to dismantle Qualcomm's business and limit its influence in the lucrative wireless markets.

Dave Mock is author of The QUALCOMM Equation and an analyst with Pacific Ridge Capital.

From the land where intellectual property is held in the same esteem as last week's Moo Goo Gai Pan, comes news that Disney's characters were successfully cloned.

Apparently, the Beijing-area Shijingshan Amusement Park has been featuring Mickey and Minnie, Donald Duck, Goofy and the rest of the Walt Disney Co. (NYSE: DIS) gang, as well as settings such as Cinderella's Castle -- right out of the Magic Kingdom.

Until recently, the park even marketed itself with the slogan, "Disneyland is Too Far." However, the Japanese press discovered and reported the deception last month, at the same time the U.S. was preparing to ask the World Trade Organization to address China's piracy issues. Shortly thereafter, the park purged itself of Disneyesque elements.

Ironically, the park has replaced Mickey and Minnie with the mascots of the upcoming Olympics in Beijing. I strongly suspect the park is not paying a license fee for the use of mascots Bei, Jing, Huan, Ying, and Ni, either.

The Beijing Organizing Committee has posted a comprehensive list of restrictions for use of the mascots, which make an amusing read . . . if you like fantasy.

Even if Vonage Holdings Corp. (NYSE:VG) can resolve its patent issues with Verizon Communications Inc. (NYSE: VZ) -- and that's a huge if -- , the pioneering Internet phone service provider is still doomed.

As I've argued before, Vonage is in a commodity business where people decide what to buy based solely on price. I just don't see how the Holmdel, New Jersey-based company will be able to compete against much larger rivals including Verizon and Comcast Corp. (NASDAQ: CMCSA).

Plus, the company continues to spend bucket loads of money. Selling, general and administrative expenses soared 72 percent in the first quarter compared with a year earlier and 11 percent from the fourth quarter in part because of the Verizon litigation. SG&A represented 46 percent of revenue in the quarter, up from 44 percent last year, and 45 percent in the fourth quarter.

Customer churn, long a problem for Vonage, rose in the 2.4 percent from 2.3 percent in the last quarter. Earlier this week, Vonage named Jamie Haenggi, who joined the company last year from ADT, as chief marketing officer where she will be responsible for "spearheading a more unified marketing approach at Vonage in line with the company's announced strategy of improving its competitive position in the marketplace," according to a press release.

Ultimately, the court will decide whether CEO Jeffrey Citron's claims that the company has found a way to work around the Verizon patent is correct. His opinion, which helped push Vonage's shares up yesterday and today, isn't the one that matters.

Internet telephone provider Vonage Holdings Inc. (NYSE: VG) released quarterly results on Thursday that were better than what most analysts had expected. The company, though, still faces a tough legal fight with Verizon Communications Inc. (NYSE: VZ) that threatens the viability of the Internet phone provider.

It would help if the company had ever made money, but it hasn't. This sounds like the satellite television and radio companies in their infancies as well. Vonage, though, may be able to get there faster. That is, if Verizon doesn't run it into the ground.

Vonage's first quarter loss was $72.3 million ($0.47 per share). Although this is less than the year-ago quarterly loss of $85.2 million, the improvement has been overshadowed by legal messes with incumbent and overpowering telecom giant Verizon.

To a point, Verizon (and all other established telecoms) are frightened by the emergence of new technology which could take customers away from them. When an Internet connection can be used for television broadcasts, radio, telephone and web usage, telecom companies who can't cash in on that start sweating. In other words, it's no surprise Verizon is going for the jugular here.

Customers clearly want Vonage's services, as the company's revenue increased 64% to $195.9 million in the first quarter, up from $119.7 million a year ago. Shares went up by about 11% as investors were pleased with such large revenue and customer gains.

Vonage CEO Jeffrey Citron stated that technical workarounds are almost in place to allow Vonage to not "infringe" on two (of the three) Verizon patents that have it in legal trouble. If Vonage can bypass the alleged legal issues it has with Verizon soon and can continue signing up customers, the company may yet make a profit and survive.

A federal appeal court gave Vonage Holdings Corp. (NYSE:VG) its life back. And, the stock is up well over 40% to $4.25.

Verizon Communications Inc. (NYSE:VZ) had filed a patent suit against Vonage and a lower court had ruled that Vonage could no longer use the Verizon IP. The net result was that Vonage could not market to new customers and was faced with huge penalties.

According to MarketWatch: "the court issued a permanent stay of a previous court's injunction that would have barred it from signing up new customers while it pursues its appeal."

Vonage will have to pay Verizon royalties and post a bond.

The fight is hardly over, and the share price increase may be a sucker rally. The eventual court ruling could still put Vonage back to where it was yesterday. The company has already been attacked for having out-sized marketing costs, and its CEO left the company two weeks ago.

Vonage went public at $17.25, and has fallen below $3 recently.

The stock may be a day trader's dream, but the ruling hardly makes it a good place for the old IRA.

Douglas A. McIntyre is a partner at 24/7 Wall St.

This is the question raised by an SEC filing by Vonage Holdings Corp. (NYSE: VG) yesterday. According to Reuters, the risks of its ongoing litigation with Verizon Communications Inc. (NYSE: VZ) They include the possible interruption of service, an inability to repay its debt and a decline in its stock that could lead to the delisting from the New York Stock Exchange.

As I posted last week, Vonage had only $154 million in cash at the end of the year. And it has $278 million in long-term debt which needs to be repaid. I would not want to be the lender. Nor would I be holding the stock or using Vonage's service.

It's time to get a backup plan in place for service. And if you hold the stock, get out now.

Peter Cohan is President of Peter S. Cohan & Associates, a management consulting and venture capital firm. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in Verizon or Vonage.

Vonage Holdings Corp. (NYSE: VG) Chief Executive Michael Snyder has resigned and was replaced by founder and chairman Jeffrey A. Citron. The company also announced it was slashing jobs and marketing costs. Plus, it announced pretty dismal preliminary earnings.

Let the Vonage deathwatch begin.

Snyder came to the company because Citron's past run-ins with the SEC made some investors uneasy. Vonage mentions that Citron will only have the job on "a short-term basis" while it searches for a replacement. Masochists are welcome to apply.

Vonage also is freezing hiring and plans to reduce its workforce by 10%. In addition, the company also will slash SG&A expenses, which no doubt includes advertising. Maybe those annoying Vonage commercials will Finlay go away.

The company reported a churn rate of about 2.4 percent. If Verizon Communications Inc. (NYSE: VZ) can prevent Vonage from signing up new customers as part of its patent infringement case, the Holmdel, NJ company is doomed because it can't sign up new customers fast enough to replace the ones that quit. During the quarter, there were 332,000 gross subscriber line additions and 166,000 on a net basis. Revenue was $195 million while the market ting costs per gross subscriber line addition was $275.

Judging from my past Vonage posts, I know the company has plenty of loyal customers. I believe in VoiP too. That's why I signed up for Comcast Corp.'s (NASDAQ: CMCSA) service. That technology is here to stay even if Vonage may not be.

Vonage Holdings Corp. (NYSE:VG) got nudged toward its eventual oblivion today when a federal jury ordered the struggling internet phone company to pay $58 million plus monthly royalties to Verizon Communications Inc. (NYSE:VZ) for infringing on three patents.

Verizon also asked for a court order banning Vonage from using the disputed technology, according to Bloomberg News. Such a ruling would effectively drive Vonage out of business because it would leave it only able to handle calls among its customers.

Vonage's stock nosedived on the news. Trading has been halted as investors prepare to watch the company go down the drain.

This case is far from over. Vonage will probably appeal the decision, delaying the axe from falling for a while. But fall it will. As Vonage's obnoxious commercials grew in intensity, so did the competition from much bigger companies including Verizon.

The unlucky investors still holding Vonage's stock may get at least some of their money back if the firm is bought out by a telecommunications company or a private equity player. But don't hold your breath waiting for that to happen.

Still, internet phone service is here to stay even if Vonage may not be.

My wife and I signed up for Comcast Corp. (NASDAQ:CMCSA)'s digital voice earlier this month and so far haven't seen any difference in service quality. Comcast's triple play of services is saving us about $70 a month. There's no way that I would even contemplate going with Vonage.

U.S. stock markets are poised to open higher today following a rebound in Asia. Dow Industrials, S&P 500 and Nasdaq 100 index futures all advanced.

But investors' re-minted optimism may not last long.

Later today, the U.S. Labor Department is expected to revise its fourth-quarter productivity growth rate downward, while a U.S. Commerce Department report is expected to show a decline in January factory orders, according to the Associated Press. The National Association of Realtors also is due to report January pending home sales figures.

These are confusing times. Even I can't remember the right date for this post.

Forget about Bill O'Reilly, you are about the enter the real no-spin zone.

With an apparent straight face, DaimlerChrylser AG (NYSE:DCX) Chief Executive Dieter Zetsche said that his company's willingness to dump -- I mean sell -- Chrysler isn't the result of pressure from either shareholders or his advisory board. In an interview with the Wall Street Journal (subscription required), the lovable Dr. Z calls it "proactive development, not a reactive development." How do you say BS in German?

U.S. Treasury Secretary Hank Paulson, who apparently has been working with Dr. Z's PR consultants, told an audience in Japan that rising defaults among subrpime lenders won't spread to less risky creditors, according to Blooomberg News. Time to start snapping up shares of New Century Financial Corp. (NYSE:NEW).

Those boy scouts at Microsoft Corp. (NASDAQ:MSFT) are apparently ready to say mean things about Google Inc. (NASDAQ:GOOG) cavalier attitude toward copyrights. When asked to comment, Google asked if "copyright" was some new Web 2.0 application or a new jam band. No seriously, Google chief counsel David Drummond repeated the company's line that it complies with existing laws. Then he started doing an impression of Aretha Franklin much to the horror of everyone.

But the gold star for excellence in public relations has to go to AAA Travel Group spokesman Geoff Sundstrum for this insightful analysis about the 12.2 cent rise in gasoline prices last week. "Certainly, no one wants to pay a high price for gasoline. But if you're feeling good about your job and your income, you're much more willing to do that than if you're concerned as to whether you'll be working a month or two from now," he told USA Today.

Interesting. I didn't realize that people with steady jobs are less worried about spending than those without them.

Did anyone really expect the fight be ween Apple Inc. (NASDAQ:AAPL) and Cisco Systems Inc. (NASDAQ:CSCO) over the term iPhone to last for long?

Intellectual property litigation is time-consuming and expensive. Companies will move mountains to resolve their disputes, which apparently has happened in this case. The Associated Press reports that the two companies agreed to allow Apple to use the name iPhone in "exchange for exploring wide-ranging `interoperability' between the companies' products in the areas of security, consumer and business communications."

I can only imagine how many hours it took the teams of lawyers involved in the case to come up with such a vague statement. Reading between the lines, it appears that Apple thought Cisco had the potential to delay the release of the iPhone. Even if Cisco eventually lost the case, that was a chance that Apple couldn't afford to take.

It remains unclear what Cisco is going to get for its troubles. All Apple agreed to do was "explore" insuring that its products would work with Cisco. That doesn't guarantee that anything will happen but it's in the best interests of both companies to try and make this relationship work.

Each year, International Business Machines Corp. (NYSE:IBM) spends about $6 billion on R&D. It not only allows the company to launch better products -- but is also a source of licensing revenues. And the occasional lawsuit, such as the one filed against Amazon.com. The amount? Like most of these kinds of suits, it is unspecified. IBM's suit covers five patents, which cover things like storage, customer recommendations and other common features that any e-commerce company would provide.

Interestingly enough, IBM filed its case in Texas, which tends to be favorable to patent-holders. But, one thing is certain: patent litigation is time-consuming. So, unless there is a settlement (which does not seem like something Amazon.com likes to do), expect this case to continue for several years.

And, as seen with the stock price of Amazon.com, investors seem blissfully unconcerned. The stock is up this morning after the news by 24 cents to $32.81.

Tom Taulli is the author of various books, including the Complete M&A Handbook and operates InvestorOffering.com.