Verizon ruling could be hard on Vonage
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(InfoWorld) - Shares of Vonag plunged Friday in the wake ofÂ a patent-infringement ruling against the companyÂ that some analysts called a grim outcome for the VoIP service provider. Vonage stock fell $0.69 to $4.17 on the New York Stock Exchange, losing more than 14 percent of its value, after a jury decided on Thursday that the company infringed three Verizon patents on commercial VoIP services technology. Vonage was ordered to pay $58 million in damages and a 5.5 percent royalty rate on future sales. Verizon also is seeking a permanent injunction to keep Vonage from using the technologies. Vonage plans to appeal. The ruling comes after a string of setbacks for the scrappy service provider, which has yet to make a profit. Vonage was founded in 2001 and has built up its customer base to more than 2.2 million through heavy investments in marketing. Along the way, it has become the most visible independent provider of VoIP, which puts voice calls on data lines for lower cost and some extra features. TheÂ company has claimed Verizon sued in order to eliminate a competitor to the traditional circuit-switched phone service that is its bread and butter. Although the judgment is not very big compared to some, it could be devastating to Vonage if it stands, analysts said. "It's a drop in the bucket, but they need every cent they can get," said Will Stofega, a VoIP analyst at IDC. The company is already dealing with shareholder lawsuits over its disappointing IPO last year along with difficulty meeting regulatory requirements like E911 emergency service and the Communications Assistance for Law Enforcement Act, he said. The $58 million sum is about as much as the company is losing every quarter, Ovum analyst Jan Dawson pointed out in a research note on Friday. Vonage lost $65 million in the fourth quarter of 2006. "As this case gets more coverage, potential customers will be worried about signing up for new service with Vonage, and existing customers may churn in larger numbers than usual. Both of these effects would be disastrous for Vonage," Dawson wrote. Verizon might also go after other VoIP providers for infringing the patents, Stofega said. Big providers like the cable operators could absorb royalties, but smaller independent players would be even more vulnerable than Vonage. Already, regulatory requirements and "a race to the bottom" on pricing are threatening the stand-alone VoIP service business, he said. In a few years, many more people will be using the technology, but VoIP companies as such may become a thing of the past. Jeff Pulver, a longtime VoIP booster who co-founded Vonage before leaving the company, was more optimistic in an entry on The Jeff Pulver Blog, in which he called the ruling "the end of the seventh inning," a reference to baseball, which has nine innings. "This isn't the end of the battle," Pulver wrote. "I hope and trust this decision does not curb innovation and progress in VoIP and other Internet communications products, services, and applications."
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AT&amp;T filed a lawsuit against VoIP provider Vonage on Friday seeking damages for alleged patent infringement.The lawsuit comes just days after Vonage settled a patent-infringement lawsuit with telecom provider Sprint Nextel.In a filing with the U.S. District Court for the Western District of Wisconsin, AT&amp;T alleged that Vonage wilfully infringed an AT&amp;T patent related to telephone systems that allow people to make VoIP calls using standard telephone devices.In the legal filing, AT&amp;T said it tried to reach an agreement with Vonage to license the patent, but failed, which forced the lawsuit.Vonage announced on Oct. 8 that it settled its suit with Sprint Nextel for $80 million. As part of that agreement, Vonage agreed to license VoIP patents from Sprint, including more than 100 patents covering technology for connecting calls from a traditional phone network to an IP network.Vonage is also in the process of resolving a patent infringement dispute with Verizon. Earlier this year, a court found&#160;Vonage infringed on Verizon patents&#160;and ordered an injunction that could have prevented Vonage from signing up new customers.&#160;Vonage won an injunction staying the order&#160;and is appealing the original infringement ruling. Vonage in August said it was close to rolling out workarounds for two of the three patents Verizon claimed.Vonage is one of the largest independent VoIP providers in the U.S. with nearly 2.5 million customers.
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A judge suggested a possible compromise in a patent dispute between Internet phone carrier Vonage and Verizon Communications that would allow Vonage to continue signing up new customers while it modifies its technologies.
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U.S. communications regulators on  Tuesday exempted Internet telephone services from certain state  oversight, a boon for Vonage Holdings Corp. and other providers  aggressively pushing the new service.
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NEW YORK -   Verizon and Vonage on Wednesday will present opening statements in a patent-infringement case that could have a big impact on consumers and the nascent Internet telephone industry. Most immediately at risk is the future of Vonage.
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A jury ruled that Vonage violated three Verizon patents, dealing a blow to a company already showing signs of stress.
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For the second time in two days, Internet phone company Vonage Holdings Corp. was hit with bad legal news Wednesday when a federal appeals court upheld a jury verdict and injunction against it for patent infringement.
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A federal jury in Alexandria yesterday ordered Vonage Holdings, an Internet telephone company, to pay $58 million to Verizon Communications for infringing its patents in a case that raised the possibility that Vonage could be barred from conducting much of its business.
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ALEXANDRIA, Virginia  - A federal jury on Thursday found that Vonage Holdings Corp. , an Internet phone service, infringed on three key patents owned by Verizon Communications Inc.
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Asks if provisions for 'workaround' are appropriate The black clouds that for the last three months have been hanging over VOIP service provider Vonage parted ever so slightly today, allowing through the tiniest sliver of sunshine as a federal appeals judge raised the possibility of a compromise in its patent war with Verizon.â¦
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By MATTHEW BARAKAT ALEXANDRIA, Va. - A federal jury on Thursday found that Internet phone carrier Vonage Holdings Corp. had infringed on Verizon Communications Inc.'s patents and ordered Vonage to pay $58 million.
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A jury dealt a blow to  loss-making Internet phone provider Vonage Holdings Corp.   on Thursday, ordering the company to pay $58 million  plus royalties on future sales for infringing three patents  owned by Verizon Communications Inc. .
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ALEXANDRIA, Va. -- Internet phone company Vonage infringed on three patents held by Verizon Communications and must pay $58 million plus possible future royalties to its competitor, a jury said yesterday.
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Unlike AT&T, Verizon wonât monitor its network to block unauthorized copying. That would violate customer privacy, it says, and would be expensive too.
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A federal jury on Thursday  found that Vonage Holdings Corp. , an Internet phone  service, infringed on three key patents owned by Verizon  Communications Inc.
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ALEXANDRIA, Virginia  - A federal jury on Wednesday began reviewing evidence in Verizon Communications Inc.'s $197 million patent infringement case against Internet phone service provider Vonage Holdings Corp..
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An appeals court agreed that Vonage infringed on two Verizon patents but sent the case for retrial regarding a third patent.