May 1, 2007 4:03 PM PDT
Vonage requests retrial in Verizon patent dispute
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One day after the high court released a unanimous opinion widely viewed as one of the most sweeping changes to patent law in years, the struggling Internet phone company asked the U.S. Appeals Court for the Federal Circuit to put its pending appeals process on hold and send the case back to the lower court for a new trial.
Vonage interim CEO Jeffrey Citron voiced confidence that the decision would have "positive implications" for his company's patent battle with the nation's second-largest phone company.
In a statement, Vonage chief legal officer Sharon O'Leary said: "According to the Supreme Court's ruling, if you patent an orange picker, and then someone else comes along and puts a glove on it to protect the oranges against bruising, you can't patent this new invention as 'novel' as it is just an obvious improvement of the original invention. The Supreme Court's decision thus focuses on keeping only what's truly novel and original protected by patents."
In a court motion obtained by CNET News.com, attorneys for Vonage argued that the jury in the original trial was instructed to weigh the validity of Verizon patents based on a test for patent obviousness that the Supreme Court ruled on Monday is too rigid, making it harder to challenge suspect patents. (That case, KSR International v. Teleflex, involved a dispute about patents on gas pedal designs and the extent to which combinations of elements can be patented.)
The jury went on to decide in March that three Verizon patents were valid and had been infringed by Vonage, which carried a damages award of $58 million, plus royalties on future sales.
Because that conclusion was based on what Vonage claims are instructions contrary to the Supreme Court's latest ruling, questions remain about whether the patents at issue are even valid. The motion suggests that the appeals court need not waste its time reviewing the merits of the lower court verdict if validity of the patents remains up in the air and should instead order a new trial.
Verizon deputy general counsel John Thorne dismissed the latest Vonage action and said his company planned to file a brief in response on Wednesday.
"There is no merit to Vonage's motion," he said through a company representative. "It's a delaying tactic to avoid final resolution of the appeal."
Vonage has consistently maintained that its service does not infringe on three Verizon patents in question, which deal with technologies involving connection of voice over Internet Protocol calls to the traditional phone network, some features for implementing call-waiting and voice-mail services, and VoIP calls using Wi-Fi handsets. It has said that it relies on commercial, off-the-shelf technology.
The Federal Circuit has dealt Vonage a reprieve for now, ruling last week that the company can continue to sign up new customers while it appeals a lower court decision. The court simultaneously set a speedier-than-usual schedule for the proceedings, scheduling oral arguments for June 25 and requesting briefs from the parties throughout May.
That timetable will likely make it tough for Vonage to persuade the court to grant its motion, said David Elkins, a patent litigation partner with the law firm Squire, Sanders & Dempsey in Palo Alto, Calif.
"The jury instructions and the manner in which they are impacted by KSR really is a substantive issue that is tightly wrapped within the merits of the appeal itself," Elkins said in a telephone interview. "For that reason, the Federal Circuit is likely to respond, 'we'll look at that in the context of the appeal as a whole'...and that becomes much more likely because the Federal Circuit has set such an unusual expedited appeals schedule."
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