Verizon and Vonage

Vonage recently lost a patent dispute with Verizon this past week for infringing on Verizon's patents. The ruling was in favor of Verizon for Vonage infringing on 3 out of 5 Verizon's patents. Vonage is required to pay 5.5% of its future earnings for any further patent infringements for a grand settlement amount of $58 million. From our discussion earlier this week about how patents are used to encourage innovations and to protect innovations, then what has Vonage done wrong in creating a competing product for customers to pay a cheaper price than the telecommunication giant Verizon can offer. An important patent that Vonage was found infringing on concerns the use of the Wi-Fi network for Internet phone service. Through a partnership with Earthlink, Vonage is able to offer such a product. The ruling has created further problems with other competing Internet phone service providers also. Will Verizon try and come after those companies? Another pressing question has not been answered however. If patents are used to create innovations, how can Vonage, or any other company, not be allowed to provide such services if Verizon can slap an infringement suit on any company taking too much of the market share away from their pockets. Competition is supposed to be good for the world in lieu of offering lower prices for everyone creating a larger market and creating market efficiency for everyone involved, but how can we achieve this, or other innovations, with such cases being ruled in favor the bigger players involved? The only conclusion that I can come to is that creativity is only allowed if it is in a completely different industry. How is this good for competition then?