Blog Post

Vonage Owes $58 M in Patent Case

Stay on Top of Enterprise Technology Trends

Get updates impacting your industry from our GigaOm Research Community
Join the Community!

In a ruling that could have wide-ranging consequeces for the entire competitive voice replacement market, a federal jury Thursday found Vonage guilty of infringing several patents held by Verizon, and awarded $58 million in past damages and imposed a 5.5 percent royalty fee on future Vonage operations.

According to analysis of the case by the telecom experts at Stifel, Nicolaus, the judge in the case may also impose an injunction stopping Vonage from selling services that infringe on the patents involved; the judge is scheduled to determine any injunctions in two weeks.

Verizon had sought $197 million in past damages in the lawsuit, which had claimed that Vonage violated five different patents related to Vonage’s Voice over IP services. The three patents that the jury found Vonage infringed included the patent that covers the VoIP interactivity with the PSTN, as well as ones covering calling features like call forwarding and mobility. According to Stifel, Nicolaus’ report, “The jury rejected Vonage’s defense that Verizon’s patents were not valid. It did not find that Vonage’s infringement was willful, which eliminates the risk of the judge imposing treble damages.”

More as we learn more; calls and emails to Vonage have not yet been returned. While Vonage had some fightin’ words for Verizon a week or so ago, let’s see if the company changes its tune now that the jury has had its say. UPDATED: Here’s a link to a Vonage press release about the verdict. In it, Vonage says it plans to appeal and that users’ service won’t be disrupted:

In addition, we don’t believe there is any basis to support Verizon’s request for an injunction and we will have the opportunity to present our position to the trial court shortly. If the trial court does impose an injunction, we will seek an immediate stay from the Federal Court of Appeals. Vonage’s customers should see no change to any aspect of their phone service.

19 Responses to “Vonage Owes $58 M in Patent Case”

  1. I have never seen regulators shut down phone lines before,especially when people depend on them for 911 and other vital services.At the worst,I believe they will not be able to sell new lines for the time being.Vonage uses ENUM,and that is the conflict with the Patent.Many other service providers do not use ENUM.Vonage can work around it within months.Hopefully they have started the process a while ago.It is always tough to be a pioneer in any Business,and I am thankful they were this time.I also think the whole industry will now take on the fight,and that should help Vonage in the appeal process.

  2. I see a lot of anti-Vonage sentiment expressed. What about Verizon? Does everyone recognize what this could mean for the VoIP industry and consumers? The precedent has been set for Verizon and other big players to use vague and trivial patents to stifle competition and true innovation. “failure to innovate” applies as much or even more to Verizon than Vonage. Just take a look at the actual patent claims. Real ground-breaking stuff like a name translation server that can return different results based on conditions such as time of day. Wow, why didn’t I think of that!!

  3. William

    …..and failure to innovate.

    I could not have said it better myself. What a shame! The vultures will now take flight and start to circle the smelly rotten remains.

  4. You gotta admit it takes a pair for Vonage to write this press release “We are delighted that the jury rejected Verizon’s meritless claim that we infringed their two billing patents. Of the seven patents Verizon originally sued on, they prevailed on only three”

    Thats pretty good. Either they already drank the kool-aid or someone had too much time on their hands.

  5. If this ruling is upheld, it seems like it will likely put the last nail in the coffin of a slow-dying company. It’s a shame to see a company that was the most visible of several truly disruptive companies go down in flames.

    But, like most failures, it’s easy to spotlight issues like poor management, bad decisions, and failure to innovate.

    That said, hats off to the original VCs who took the initial capital risk in the company and (rightfully) got their return before the company went bust.