April 5, 2007 12:52 PM PDT

Vonage clarifies purpose of deal with VoIP Inc.

Internet telephone provider Vonage on Thursday set out to clear up confusion about a contract it struck with network wholesaler VoIP Inc., emphasizing that the deal has nothing to do with developing a work-around to help Vonage avoid using patents held by Verizon Communications.

The deal, mentioned in an 8-K form filed by VoIP Inc. with the Securities and Exchange Commission on March 28, is a standard network termination deal, said Brooke Schultz, a spokeswoman for Vonage. The contract had spurred some bloggers and experts in the industry to speculate that Vonage was working with VoIP to come up with a work-around for patents held by Verizon.

Schultz explained that Vonage is using the VoiceOne network, which is owned by VoIP Inc., to transport voice over Internet Protocol calls.

"VoIP Inc. is not providing technology to Vonage," Schultz said. "We're simply dumping minutes onto their network. It's no different than any other carrier partnerships that Vonage has with companies such as Level 3 or XO Communications. We've had dozens of these partnerships for years."

In March, a jury found that Vonage's IP telephony service had infringed on three patents owned by Verizon. While the jury found that Vonage did not willfully infringe on Verizon's patents, it did award Verizon $58 million in damages. On March 23, U.S. District Judge Claude Hilton said he would issue an injunction barring Vonage from using the technology included in the three patents. But he said he would not issue the injunction until friday.

Now Vonage and its 2 million-plus subscribers are waiting to see if the judge will grant a stay at the same time he issues the injunction to give Vonage more time to either appeal the case, work out a deal with Verizon, or come up with a work-around.

Vonage maintains that it is not infringing on any of Verizon's patents. The company has said repeatedly since the verdict was announced that it plans to file an appeal. And since the judge announced he would issue an injunction against Vonage, the company has filed motions with the court for a new trial and for an alteration or amendment of the judgment. In response, Verizon has also filed documents opposing each of Vonage's motions.

As for the fate of its service, Vonage is adamant that its customers have nothing to fear.

"We are focused on getting a stay from Judge Hilton or from the appellate court," Schultz said. "And we believe we will continue to provide telephone service, just as we've stated in several press releases."

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VoIP Inc., Vonage Holdings Corp., injunction, patent, Verizon Communications

6 comments

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Well, so what if it was a dodge?
Seriously - they got hit w/ an injunction whether they were actually guilty of infringement or not, but they still have to pay the bills, so...

Verizon can go stuff themselves in either case with such blatant patent trolling.

/P
Posted by Penguinisto (5042 comments )
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EXACTLY
Verizon attacks the one name-brand company that is competing for voip customers, to try to shut them down. All these internet technical patents are broadly written mumbo-jumbo. Vonage had licensed and bought patents that cover their operation, so they aren't trying to get something for nothing. But because they are a fierce competitor with a better price, Verizon is trying to smack them down by saying Vonage's patents aren't enough -- that Verizon's patents also cover some of the same voip stuff. Somehow they convinced a clueless jury -- and now the judge has to go by what the jury decided.

But you notice Verizon is NOT suing Packet 8 and the countless other small time voip companies who use the exact same technology? They are only suing Vonage, hoping to crush them. Then, they can sell their over-price voip to their broadband customers as a "bundle" deal.

I am not a Vonage customer, I live in Comcast territory. Comcast is selling their "digital voice" (voip) at only about a 15% discount off BellSouth's prices -- but with free long distance thrown in, of course (since it's voip). Whereas Vonage is giving a 50% to 66% discount off Bellsouth's prices, plus free long distance and many free international calls. I'm sure the discrepancy is the same in Verizon territory -- so they've decided Vonage must die.
Posted by chazzsubscribe (55 comments )
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Probably not infringing on patents
Because in software you could sue anyone for a comperable MINOR hardware innovation like Call Fowarding etc. It is so minor that any software designer would have to pay Verizon money based on basic software operations.

I have a hard time believing Verizon's claims or at least a work around needs to happen for such basic technologies. Verzion seems likes it want to own the software industry.

Vonage needs to prove that Verizon's claims are intgral to basic software practices.
Posted by Blito (436 comments )
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