Editor's note: This story was updated at 9:20 a.m. PST.
WASHINGTON--A federal appeals court weighing the patent case that Verizon filed against Vonage heard arguments on Monday for an hour without reaching an immediate decision.
After a federal jury ruled on March 8 that Vonage did infringe patents, the Internet phone company has been fighting for its life through the legal process. No injunction is currently in place, however, and Vonage has claimed to have a work-around.
One hint about what the U.S. Court of Appeals for the Federal Circuit may be thinking came from comments from Judge Timothy Dyk. He said the court was in something of a bind because Verizon insisted on an injunction that could effectively shut down the provider of voice over Internet Protocol (VoIP) services. Because Vonage's life is on the line, he suggested a "middle ground" approach may be necessary.
"Shouldn't the district court allow time for a work-around as part of the injunction?" Dyk asked Verizon attorney Richard Taranto in a packed courtroom. "I'm not sure Verizon has an interest in putting Vonage out of business."
Taranto said he didn't think that would be fair to his company, particularly since he said Vonage has not presented to the court any specific timeline for such a fix.
Vonage has maintained it did not infringe on the patents, but even if the jury's finding is upheld, an injunction is not appropriate, attorney Roger Warin said. "There is no irreparable harm" that Vonage couldn't address simply by paying the required $58 million damage award and 5.5 percent of future sales, he told the three-judge panel, which also included Chief Judge Paul Michel and Judge Arthur Gajarsa.
The question of whether to bar Vonage from using the patents at issue has been a sticking point before. Judges are supposed to weigh certain factors before making such a decision, and at the lower court level, U.S. District Judge Claude Hilton took a step that he considered a trade off: allowing Vonage to keep its existing customer base but ordering it to stop signing up new subscribers while its products continue to infringe.
But upon Vonage's request, the Federal Circuit opted to grant a reprieve from that decision until an accelerated appeals process played out.
The bulk of the arguments on Monday revolved around technical aspects of terms used in the definitions of those patents and lawyerly debates over prior case law, as is typical in such disputes. The patents Vonage was found to have infringed deal with the connection of voice over Internet Protocol calls to the regular phone network, some features for implementing call-waiting and voice-mail services, and VoIP calls using Wi-Fi handsets.
One topic that was conspicuously absent was talk of the U.S. Supreme Court's recent landmark decision in a case called KSR v. Teleflex. That ruling loosened what some have argued was an overly rigid way for deciding whether inventions--particularly combinations of existing items--are too "obvious" to warrant patent protection and had led to a glut of junk patent approvals.
Vonage had argued in its briefs with the appeals court that the high court's finding was grounds for an entirely new trial because the jury was instructed to weigh the validity of the patents at issue under the old, stricter test. Verizon vigorously disputed those arguments, saying the Internet phone company never objected to the jury instructions at trial and should not be complaining now.
The appeals court said last month that it would consider the effects of the Supreme Court ruling as part of the broader appeal, but neither the lawyers nor the judges broached the issue on Monday.
It's unclear when the appeals court will issue its final decision, but given its unusually speedy calendar thus far, it seems likely that an opinion could emerge sometime this summer.