March 23, 2007 9:44 AM PDT

Vonage ordered to stop using Verizon VoIP patents

A federal judge has ordered Vonage to halt its use of three voice over Internet Protocol patents owned by Verizon Communications, but he postponed enforcing the ruling for now.

U.S. District Judge Claude Hilton in Alexandria, Va., on Friday granted Verizon's request for a permanent injunction that bars Vonage from using three disputed Verizon patents. He sided with Verizon's argument that it would suffer irreparable harm if use of the patents was not terminated and rejected Vonage's argument that the injunction would harm the public interest.

Hilton opted, however, not to make the decision effective until a court hearing in two weeks. At that time, both parties will have the chance to make arguments as to whether the injunction should be put on hold while Vonage appeals.

The judge's action follows a setback dealt by a federal jury against Vonage on March 8. The eight jurors concluded that the New Jersey-based company had infringed on three of five Verizon patents at issue and ordered it to pay $58 million. Vonage has announced its intention to appeal the verdict but is waiting on the outcome of the injunction decision before it formally makes that filing.

Vonage said it is confident it will obtain a stay of the injunction from a federal appeals court if Hilton denies its initial request.

The patents Vonage was found to have infringed deal with technologies involving connection of VoIP calls to the regular phone network, some features for implementing call-waiting and voice-mail services, and VoIP calls using Wi-Fi handsets. Vonage has maintained that even if the injunction is upheld, its some 2.2 million subscribers will not encounter disruptions because it is developing a technological workaround.

"We are confident Vonage customers will not experience service interruptions or other changes as a result of this litigation," CEO Mike Snyder said in a statement.

Verizon applauded the judge's move. "We are pleased the court has decided to issue a permanent injunction to protect Verizon's patented innovations for offering commercial-quality VoIP and Wi-Fi services," John Thorne, senior vice president and deputy general counsel, said in a statement.

The lawsuit dates back to June 2006, when Verizon filed suit against its phone market rival, accusing the growing company of infringing on seven of its patents. Verizon later scaled back its complaint to include only five patents.

After hearing arguments from witnesses called by each side, the eight jurors decided earlier this month that all five patents were valid but that Vonage violated only three of them. The jury decided Vonage had not violated two patents related to billing systems designed to prevent fraud. It also rejected Verizon's argument that the infringement was willful, which could have tripled the monetary damages awarded to Verizon.

Sharon O'Leary, Vonage's executive vice president, chief legal officer and secretary, continued to defend the company's practices in a statement Friday. She said the firm "relied on open-standard, off-the-shelf technology when developing its service" and argued that court evidence failed to prove otherwise.

Vonage also faces a patent infringement suit from Sprint-Nextel, which claims the Net phone provider is infringing on seven of its patents related to the processing and delivery of voice and data packets.

Vonage shares fell 6.2 percent, or 25 cents, to $3.80 shortly after the judge's decision. Trading in the stock was then halted.

Reuters contributed to this report.

See more CNET content tagged:
Vonage Holdings Corp., injunction, patent, Verizon Communications, VoIP

7 comments

Join the conversation!
Add your comment
Which Patents
Anyone know of a list of the Tech Specs on these
patents?
Posted by cekortech (5 comments )
Reply Link Flag
Verizon VoIP?
If there are indeed questions of infringement, Vonage should be talking to the Skype (eBay) guys post haste!
Posted by Schratboy (122 comments )
Reply Link Flag
Patents in your arsenal
Patents, originally designed to keep the big guys from just
stealing your ideas are now just used as weapons to stifle
competition.

The fact that they are not just demanding ongoing royalties, but
demanding an injunction tells you that this is about trying to kill
competition.

The real losers in all this are the consumers.
Posted by m.meister (278 comments )
Reply Link Flag
Re: Patents in your arsenal
Unfortunately, you're 100% correct.

The system in use today is completely broken. It's being used, just as you said, as a weapon.

That hurts consumers.

Charles R. Whealton
Charles Whealton @ pleasedontspam.com
Posted by chuck_whealton (521 comments )
Link Flag
Get Out Of The Dark Ages
This is how the big telcos are suppressing development. Let's get real here. Your options for a wired high speed connection is between the cable companies and the phone companies. They want to make sure they have no competition, so they are blocking 3rd party communication services.

For example, here in NC in areas served by BellSouth, they no longer lease their lines for DSL. You either go thru them, or through Time Warner who also does not lease out lines, they only pay commission to who brings you as a customer.

Add that to the GSM carriers now blocking VOIP of any kind, what does this all sound like to you? They do not want you, the customer, to have options. Its either them, or nobody.

That's the real monopoly, and this whole patent crap is just another weapon they use to stay in control.
Posted by FusedAndCondazed (26 comments )
Reply Link Flag
Vonage to pay 5% roaylties to Verizon.
Courts have recently ruled that VOIP can piggyback on existing Internet Telcos and lines. No kidding. I can use any service I want with websites so why not with Vonage?

So Vonage will pay the royalties I guess 5%. No biggy. The reason for this is simple. It's industry and when a carrier like Vonage interrupts the big boys I think they should pay a royalty if they own patents, but they can also use just WiMAX coming out and avoid allot more of these fees as WiMax is more open source standard.
Posted by Blito (436 comments )
Reply Link Flag
RE: "Get Out Of The Dark Ages" You are correct, and beat me to the line
Your posting is correct, and my compliments to you.A sad bit of history is how the telephone companies have always monoplized our daily lives, and now the cable companies it seems have become just as bad.
Posted by the1kingarthur (47 comments )
Reply Link Flag
 

Join the conversation

Add your comment

The posting of advertisements, profanity, or personal attacks is prohibited. Click here to review our Terms of Use.

What's Hot

Discussions

Shared

RSS Feeds

Add headlines from CNET News to your homepage or feedreader.