Interesting legal decision against Vonage

[Andre Kesteloot]

  International Herald Tribune <http://www.iht.com>
Vonage can't sign up new customers, judge rules

Reuters
Friday, April 6, 2007

*ALEXANDRIA, Virginia:* A U.S. judge has banned Vonage, the Internet 
telephone company, from signing up new customers while it appeals a 
ruling that it infringed on three patents held by Verizon Communications.

The decision Friday also requires Vonage to post a $66 million bond.

In March, a jury found that Vonage, based in Holmdel, New Jersey, had 
infringed on the Verizon patents and should pay $58 million. Verizon, a 
telecommunications company based in New York, claimed that Vonage had 
lured away 600,000 customers by copying such technology as voice-mail 
features, as well as the method for allowing Internet calls to reach 
traditional phone lines.

The latest ruling is like "cutting off oxygen as opposed to a bullet in 
the head," a Vonage lawyer, Roger Warin, said, adding that it will "in 
effect slowly strangle Vonage."

Rebecca Arbogast, an analyst with Stifel Nicolaus, said the order was a 
blow to Vonage and its existing 2.2 million customers. "If they can't 
get new customers, I think it's going to be tough to attract capital," 
she said.

Vonage has said it expected to get a 120-day stay from a U.S. District 
Court judge or an appellate court. The company is certain to immediately 
appeal Hilton's ruling, lawyers said.

Winning a stay would give Vonage time to develop technology that handles 
the same tasks as the inventions at issue in the lawsuit without 
infringing on Verizon's patents. That may help assure customers and 
investors that the company can endure its legal battle with Verizon.

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