June 19, 2006 11:07 AM PDT

Verizon sues Vonage for VoIP patent infringement

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The bad news for Internet phone provider Vonage keeps piling up, as the company now faces a patent infringement lawsuit from telephone giant Verizon Communications.

On Monday, less than a month after the company's disappointing debut on the New York Stock Exchange, Vonage acknowledged that Verizon, the second-largest phone company in the United States, has filed a lawsuit charging that Vonage infringed on seven of its patents related to its voice over Internet Protocol, or VoIP, service.

Verizon's complaint was filed last Monday in a U.S. District Court in Virginia. It alleges that Vonage infringed on patents held by Verizon that describe technology for completing phone calls between VoIP users and people using phones on the traditional public switched network, authenticating VoIP callers, validating VoIP callers' accounts, fraud protection, providing enhanced features, using Wi-Fi handsets with VoIP services and monitoring VoIP caller usage.

Vonage's service uses software that turns voice signals into packets and then transmits them over broadband connections, essentially turning any Internet connection into a telephone line. Verizon sells a similar service, called VoiceWing.

In a statement released Monday, Vonage said "its services have been developed with its own proprietary technology and technology, licensed from third parties." The company also said it would "vigorously defend (against) the lawsuit." Vonage said it hadn't been previously notified by Verizon that the company thought it was infringing on its patents.

Verizon acknowledged that it had filed the complaint, but a company representative declined to comment further. The representative also would not clarify whether the company is looking into filing lawsuits against other VoIP providers.

The lawsuit comes shortly after Vonage's disappointing stock market debut. The company lost nearly 30 percent of its value in the first week of trading. The Internet telephony provider has also been gearing up to defend itself against several investor lawsuits. Shareholders allege that the company misled them and created artificial demand for the stock.

News of the Verizon lawsuit sent shares of Vonage down $1.03, or 8.13 percent, to $8.22.

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Vonage Holdings Corp., VoIP, Verizon Communications, lawsuit, patent

14 comments

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Ah, yes.
Another "let's sue the competition into submission in the hopes that we'll bankrupt them" tactic thus showing further abuse of IP patenting.

*sigh* Will this madness ever end?
Posted by JLBer (100 comments )
Reply Link Flag
Unfortunately ... no
Unfortunately, not in the near term.
Posted by kevvykev (4 comments )
Link Flag
But trust them with net neutrality....
This is a taste of what's coming...can't beat em, ask for legislation to mess with their services.... that's not working...sue em.

Why do they have to be so greedy....Patented technology to convert voice to packets? I mean come on! Why don't they sue Skype/eBay then or Cisco or anyone else using SIP?

Its this corporate greed that will ultimately lead us to lose our lead as a country of innovation and market competition. And no amount of Lobbyist money can ever fix that.
Posted by LarryLo (164 comments )
Reply Link Flag
Yet another blow-
I think when Vonage hits $2 I'll buy a ton- At that point one can only assume that they will be a part of Verizon and the stock will soar!

my 2 cents
Mike White
<a class="jive-link-external" href="http://www.digiumcards.com" target="_newWindow">http://www.digiumcards.com</a>
Posted by digiumcards,com (1 comment )
Reply Link Flag
I love my Vonage
and Verizon is trying to take it away so they can charge people double and triple what I am paying right now for better features and service.
Posted by ChazzMatt (169 comments )
Reply Link Flag
Like my vonage also
Cheap, decent service. Can you believe Time Warner charges $40 for the same service when Vonage charges $25?
Posted by Gasaraki (183 comments )
Link Flag
Who really cares about Vonage
There is a point where VoIP has to be stopped. When one company relies on 20 other companies to be able to provide a service for a rate which can be obtained through any other company which offers the same service on their own then this means that the end user is paying 20 times the rate they should be paying for the same service.
If you have high speed internet then the same ISP should be alloting VoIP services as an included feature, or at least a reasonable rate since the systems are already there (no extra cost to them). Vonage did poorly on their opening day because what they offer is 15 years behind the times and if Verizon is sueing them then Verizon needs to open their eyes and get up to date.
Posted by AAPPhotos (1 comment )
Reply Link Flag
people like you
People like you are the reason why technology is so far behind!

Vonage is a great service, and is providing competition that is needed right now, I personally have them myself and love the service. The IP phone from the cable companies around here is $30 for just a plain dial tone, and $40 for the same thing that Vonage is offering for $25!

They are not relying on "20 other companies", they are simply using technology that's already in place.. that's like saying that Roaming on a cell phone has to be stopped because it's using another companies infrastructure to get your call through.. ridiculous
Posted by p8ntballa06 (1 comment )
Link Flag
oh oh oh oop's we didn't mean to steal your copyrights Verizon.
oh oh oh oop's we didn't mean to steal your copyrights Verizon.
Posted by vdavid23 (1 comment )
Reply Link Flag
BIG Goliath is pissed
Hey only thing I can say is Verizon is loosing land lines like crazy and wants to set market levels with VoIP and it's own services that are 30 to 40% higher. My comment is Verizon get rid of the "FAT" and you will be able to compete. Don't pick on the small guy because consumers will associate Verizon with the "Wallmart Syndrome of today". I will always cheer for the small guy having paid $65.00+/month for a Verizon land line now I enjoy the same quality and better services for more than half of the price. Verizon can not put toothpaste in the tube VoIP is gone mainstream....
Posted by wiz55 (3 comments )
Reply Link Flag
Verizon Fails To Provide 911 Service - Too Bad!
Verizon has failed to develop nation-wide 911 service for Voicewing and in turn has stalled it's own potential to corner the VOIP market. Its attack on Vonage is tantamount to a spoiled brat who lashes out at the designer of a better mousetrap!
Posted by marblevt (1 comment )
Reply Link Flag
Verizon and E9-1-1
Verizon could solve all the E9-1-1 issues by eliminating Intrado and going with a service that covers the entire United States geography. This is accomplished by VIXXI Solutions. VIXXI Solutions can terminate all E9-1-1 calls for Verizon at a fraction of the cost. Visit www.vixxisolutions.com
Posted by stringer96 (1 comment )
Reply Link Flag
Vonage and VOIP infringement all smoke and mirrors!
Let's get serious, As a consumer we want to get rid of monopolies that overcharge for a service. Vonage is able to provide VOIP at a reasonable price to the average person, this is good. I found another, NetLINKSGLOBAL.com. Check out the VOIP link and they offer VOIP for about $18.00 per month and have a VIDEOPHONE too!!! VOIP is the future of telephone communications and we should learn more about it. Verizon is getting too big! Too expensive! and too greedy!
Posted by freedomofspeach (1 comment )
Reply Link Flag
Can you say monopoly
Is this as painful as it gets watching traditional telecom beat down something that can literally start the industry down the road to little or no cost telephone services.

When such vague and broad patent infringement lawsuits allows the highest paid lawfirms to, as usual, make a buck not understanding the global impact on a technology that can truly benefit us all, we all lose.


This is as wild as saying ATT owns the patent on dial tone. shh i hope i didn't start something...
Posted by Noah Rafalko (2 comments )
Reply Link Flag
 

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