Vonage: Litigation Could Bankrupt Us
By Ed Oswald | Published April 18, 2007, 10:53 AM
The news continues to get worse for Vonage, which last month lost a major patent infringement lawsuit filed by Verizon Wireless.
In a filing with the Securities and Exchange Commission Tuesday, the VoIP provider acknowledged for the first time publicly that its legal problems could seriously harm the company's financial health.
Chief among these concerns is the specter of bankruptcy, Vonage says. Among the possible risks are the loss of customers, distribution channels, and damage to the brand, which could lead to its delisting from the NYSE and bankruptcy and litigation.
"The defense of any lawsuit could result in time-consuming and expensive litigation, regardless of the merits of such claims," the company said in the filing.
So far, the company has been ordered to pay $58 million and royalties to Verizon as part of a March judgment against it. In addition, it was banned from signing up new customers, although it successfully won a stay pending its appeal.
Vonage's latest problems dragged its already waning stock price even lower: in early morning Wednesday trading, the stock plummeted more than 8 percent to $3.04. It is already down more than 80 percent since its IPO last year.
Vonage should go bankrupt. The only reason they're still alive is because they're overcharging current and previous customers.
One problem I had when switching from Vonage to Lingo (http://www.lingo.com/) was that it took me 3 phone calls to Vonage to get my phone number cancelled.
Yes, I know I could have kept my phone number when switching to Lingo, but I trusted Vonage like I'd trust a homeless person.
Score: 0
|Sounds good, but what makes you think Lingo won't be going out of business about a week after Vonage?
Score: 0
|Uhm, have you looked at what Verizon and the cable companies charge for VoIP with fewer features?
---->Vonage should go bankrupt. The only reason they're still alive is because they're overcharging current and previous customers.
Score: 0
|Dudes, the issue here is whether Verizon's patents are valid. They claim ownership of what could be considered an open standard, discussed in forums a year or more before they filed. And they do it in a generic, verbose way. No one in buying the Verizon VoIP, so they'll sue the comtetition. A company their size can pretty much do what they want.
Score: 0
|while I believe it is important not to base your companies profit line on an infringing patent, it is equally disturbing that courts allow rulings to bankrupt competition rather than give 'fair' compensation to defendants of patents.
Vonage was wrong in not researching the Verizons patent, but 58 million + royalties? and they cannot sign up new costumers...Verizon looks like NTP in the NTP vs. Rim. Greedy, money worshiping lawyers.
What benefits are there to the public? nothing. if they bankrupt vonage, we americans pay for it and get less competition. Why can't the courts reward on a plan that doesn't keep the company from breaking so that the current subscribers aren't pawns?
Has anyone discovered what the patent is? NTP has the patent for the delivery of electronic messages to handheld devices. It is so vague that it takes 20-50 lawyers on each side of the case to determine if there was an infringment. Hopefully the bill to reform patents cleans up this disturbing mess.
Score: 0
|I don't know the exact subject of the patent but if Verizon wins, who's to say they won't go after other VOIP offerings? I use skype and bought the skype out feature for $15 to cover the whole year and I do not want to lose that. I realize that many people don't like Vonage but let them go bankrupt from the customers not liking them, not from the patent craze that has been erupting the past couple of years
Score: 0
|First off, I'm a Vonage customer. Have been for quite awhile and I have no real complaints against them FOR MY SERVICE.
With that said, to say that they should be able to remain in business after this lawsuit is just the same as saying that theft is legal.
"The exclusive right granted to a patentee in most countries is the right to prevent or exclude others from making, using, selling, offering to sell or importing the claimed invention." (http://en.wikipedia.org/wiki/Patent)
That statement really sums it up. Verizon patented the technologies in question and Vonage used them without permission. It boils down to theft and deception on Vonage's part and for that they should be put out of business.
As for going after Skype and other companies? Well, if they participated in patent infringement, then they should suffer the same fate as Vonage.
~dnc
Score: 0
|Well put!
Score: 0
|Salute.
You nailed it.
Score: 0
|And I suppose that you believe that RIM infringed on NTP's patents also? I don't have a problem with patents I just find it dumb that a major company can be sued for patents that are very general. And like I said, I don't know the specifics of the patent and maybe it is a legitimate patent. But pretty soon someone is going to start suing Microsoft because they patented the "OK" button.
Score: 0
|Well, not so fast. I agree completely that theft is theft and if indeed the patents are valid, then Vonage is done for.
However, consider the following:
1) Vonage has been around for at least 6 or 7 years (I don't know when they started but I've had their service that long). Verizon has had PLENTY of time to sue them if they were really infringing - and suing them before they got lots of money would have totally put them out of business - so why didn't that happen?
2) I have no idea whether those patents are really valid - history is full of lawsuits that put companies out of business because they couldn't afford to fight the whole way to prove the patents were invalid.
3) If these patents really are valid, then what happens to things like Skype, Asterix and even VoIP as implemented by cable companies?
If you look at the cost of VoIP from Verizon or Optonline (say), it's significantly higher than Vonage.
Hmmmm?
Score: 0
|1.) Do you know for sure they haven't been in contact with Vonage's legal department, finally given up and decided to take it to court? Of course not. We're going by what we see here and by what we've seen in the past.
2.) Let's assume they're valid. They were awarded. For the time being that's that.
3.) I'm sure they'll get to them as soon as they're done with Vonage.
If you look at the cost of VoIP from Verizon or Optonline (say), it's significantly higher than Vonage.
Because while Verizon and Optonline are either covering dev costs and/or licensing fees, Vonage got it for free.
Score: 0
|1. The more money Vontage makes, the more you can sue for damages. Why destroy a company if you can collect royalties, as was court ordered? More money. And it may have taken this long to engage on patent infringement to collect enough data to go to suit and get that fat lump sum of cash REAL quick... ;] But, who knows really why they took so long. ;D
Score: 0
|I can't say what Optonline was thinking but I suspect strongly that the Verizon charges were because high because they didn't want to undercut their existing POTS business. Wouldn't be the first time a company has lost its way because it wouldn't throw out the parents to let the children survive.
--->Because while Verizon and Optonline are either covering dev costs and/or licensing fees, Vonage got it for free.
Score: 0
|Now everybody knows that Microsoft copied the "OK" from Apple :) Well, Apple was calling it the "Satisfactory" button, but just the same.
Score: 0
|BWAAAAAHAAAAAAAHAHAHAHAH!
Score: 0
|Litigation could bankrupt them?
How about using other's technology without authorization???
Now that's a defense! "If they don't let us use their technology (that we effectively stole), we will go out of business!"
Score: 0
|Truely.
Saw this article and thought, "No sh*t, sherlock."
Hey, jeb, thays got sumn brayns up theyre...
Score: 0
|Let's compete with the big phone companies. We'll steal their cash cow land line phone service customers, and send their phone calls over the same lines, but as Internet data. Everybody will sign up and there won't be anything the big phone companies can do about it. Woo hoo. Woo hoo hoo.
Score: 0
|Indeed. ;) LOL
Score: 0
|Its not like I will miss them. I canceled my account then they billed me 4 more months. It took 9 weeks to refund the money. I went almost half a year without service before they refunded the amout they overcharged. I am glad they are going out of business!!!
Score: 0
|