Vonage Wins Temporary Stay, Can Sign Customers

By Nate Mook | Published April 6, 2007, 11:45 AM

Update ribbon (small) 6:45 pm CT April 6, 2007 - Late Friday, VoIP service provider Vonage announced with some relief that the US Court of Appeals for the Federal Circuit has issued a temporary stay of a judge’s order imposed earlier today. Were that order to take effect, then Vonage would be prohibited from signing on new customers beginning next Thursday.

The temporary stay gives Vonage time to assemble its plea for a permanent stay, but probably not much more time – maybe a matter of days.

At the close of trading on the NYSE exchange Friday, Vonage stock value racked up another 6.9% to its loss of over 77% of its IPO value last May. Analysts tonight are saying today’s temporary stay may only provide Vonage with a tiny bit of breathing room to gather revenue – which it will need in the upcoming battle with Verizon – since customers are already wary of the fact that Vonage’s claim to its own technology has been successfully challenged.

11:45 am ET April 6, 2007 - A federal judge in Alexandria, Virginia has issued an injunction against Vonage that prevents the company from signing up any new customers. Vonage was found guilty of infringing on patents owned by Verizon earlier this month.

U.S. District Judge Claude Hilton did not grant Verizon what had initially asked for: a permanent injunction to bar Vonage from further use of the technologies. However, Vonage says that not being able to add new customers is just as dire for the Internet telephone company.

Verizon recommended the imposed injunction as a compromise to keep Vonage in business.

"It's the difference of cutting off oxygen as opposed to the bullet in the head," Vonage lawyer Roger Warin said after the decision.

Vonage vowed to appeal the ruling, but the company must lodge a $66 million appeal bond. Vonage was ordered to pay damages of $58 million to Verizon, in addition to a 5.5 percent royalty on all future Vonage sales.

Verizon sued Vonage in June 2006, accusing the fledgling voice over IP firm of knowingly infringing on seven patents related to functionality such as call forwarding and fraud detection. Vonage said it never knew of the patents and was not approach by Verizon until the lawsuit.

Although Vonage has remained adamant that it would remain in business despite the outcome of the case, analysts are beginning to question the viability of the company following Friday's ruling. Vonage has signed a license agreement with another Internet telephony company, VOIP, Inc., to utilize its network if Vonage must shut down its own, but the company has largely remained mum on its backup plans.

Comments

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I can understand sticking up for patents. But this is a perfect example of a big giant powerful company making an example out of a competitor. I mean vonage can't handle something like this they offer a single service and product. If this was AT&T or oh wait no one else is left LOL. In other words if this was MCI or BELLSouth or SBC or whoever was not merged together in the last few years it wouldn't have made a dent, its just one type of service.

This was a quick easy no content for verizon and even if it was the big guy will come out on top. All we have to do now is wait for Verizon and At&T to merge and the telecom company will be able to do whatever they want, they already can. Want to tell me what kind of judge or organization who cares about competition would let 5 telecom companies turn into 2 in just a couple of years literally with SBC buying two of them back to back?

No start up has a chance and Vonage, was good while it lasted, cheap descent rates with a new technology still being perfect, guess they should of done their research so they didn't get burned so easy on patent screw up. but who can blame them. they came up with a technology, either purposely or on accident violanted some patents, which with hundreds of millions of them, can't be all researched. You are busy trying to make a business model.

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If you want to debate the validity of market consolidation, do so.

But it has NO BEARING on Vonage's right to illegally use Verizon's technology.

Vonage could have easily applied to license it. They did not. As such, they have no legal right to its use.

Now go complain to the regulatory commissions regarding market consolidation.

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Do you have any idea what it would be like to start up a business model, develop a technology go into business using it as a start up.

I mean do you have any idea how many patents there are millions and millions and millions.

so now if every company says lets make a product here is an idea. Oh wait lets sit here for 5 years and before we come to market lets research every patent there is and see if we violate any of them. Well lets see how many new company's would there be if they did that? Probably none. So its up to companies that have the patents to do research in other company's products to see so they violate our patents, oh they do! Lets sue them into the ground. rinse and repeat.

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I recently went from Verizon to Vonage about 4 months ago. I think the service has been excellent with very few issues. My reason for switching equals simply this... $25 per month vs. $110 per month for identical features Nuff said

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Vonage owns.. i have never had a problem with them... I used verizon for years (standard phone line).. I think I had to call them 1 time in 2 years...

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They are doing people a favor. The Vonage stories are as bad or worse than the Dell customer support.

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Not true...never had a problem with them and I've been a customer for years. Now, Verizon is a different story. Worst customer service I've ever seem, even worse than Dell.

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I've been a long-time Vonage customer, never had an issue. Neither has anyone else I know who is a customer.

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That ruling was appealed and stayed this afternoon. They can continue to add customers, for the time being.

http://www.washingtonpos...1088.html?hpid=sec-tech

Verizon is the scummiest company in existence right now. They absolutely detest their customers and offer them no respect at all. Then, after those customers finally become fed up and leave the worlds most arrogant company, they try to sue their competition out of business. All Vonage did was provide good service at a reasonable price.

I will NEVER give Verizon another dime of my money. I'd do without any type of phone before I would pay them anything.

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Does anyone know if this will affect other VoIP providers as well? I use Lingo currently and as great as they are I doubt they could or would be able to put up a fight against Verizon, especially as Vonage has been dealt the blow in this matter.

Also, theres something that doesn't make any sense to me. Vonage has been operating from BEFORE Verizon started Voicewing (Verizon's VoIP incarnation) yes? So how does this patent work? Or is it a situation where Verizon patented tech that it didn't release until later on?

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Here's how patents work: I run a company. I do a lousy job, don't keep up with technology, and treat my customers like nothing more than a revenue stream. Eventually, another company comes in and does a better job. I start to lose business, and instead of improving my service and treating my customers better, I sue the other company. Some bought-off judge who thinks that patent is a type of leather rules in my favor hoping he'll get a free RAZR upgrade.

That's how patents work. ;o}

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Nooooooooooo!!!

I have been using Vonage for years with little or no issues.

Verizon is too big of a monster to deal with. I know, as an IT Manager their offices can care less of individuals, small business, and even big corporations.

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So you are a current customer? Then you have nothing to worry about, this only affects new customers that haven't signed up yet.

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yup you got nothing to worry about...except maybe vonage going about of business...but that's nothing to worry about really.

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well verizon is in a better position with it's fios package now. voip is really a method of keeping the arcaic phone system alive. the twisted pair is essentially dead, the whole backend is digital so why not install lan/fiber jacks instead of phone jacks on the consumer end and actually take advantage of todays tech.

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VoIP is voice over Internet Protocol, so it works over any IP connection, be it DSL, cable or FiOS. It doesn't rely on the existing phone system at all.

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A LAN jack would require a repeating device every 100 metres and oh yeah, and since when is there a nation wide network of fibre? lol!

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When is there a nationwise network of fiber? hmmm probably since about 1995

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It does, otherwise you can't call land lines. Let be more clear , we are using concepts developed over 100 years based on what was then new tech and dumbing down our current tech to make it fit with those old concepts. Another good example would be the qwerty keyboard. It's based on a mechanical typewriter layout that was Specifically designed keep people from typing fast so it wouldn't jam. If you have any other examples feel free to share

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Because regardless of the backbone there's still alot of work to be done to get the fibre into every building. Building on POTS infrastructure is massively cheaper. While it's a novel thing to look forward to, I have no doubt that the costs to be handed over to the customer would make our bills at the least 80+ a month, not to mention that those with direct fiber data transfer wouldn't be able to connect to the rest of the world unless there was VoIP at some end anyway to downstream the call into POTS format - in the end, it would be a giant waste of money.

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I think Nate means it doesn't need an existing phone system inside the fiber users own home. And if you think about it, VoIP doesn't DEPEND on the phone system in the way that you mention. It's what's used right now to convert data through IP to POTS (What you refer to as dumbing down). But take into consideration that every country on earth doesn't have a fiber backbone, nor can they afford or find the need to put one in. Fiber uses data which VoIP would have to convert anyway into POTS for fiber uses to call POTS lines anyway.

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