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2.2 million customers may be all that Vonage ever has if the injunction passes

"People do stupid things" used to be the tagline in Vonage's television ads. After losing three out of five patent infringement lawsuits, one might consider this a fine example of the pot calling the kettle black. Verizon has been the biggest thorn in Vonage's side, having recently been awarded $58 million in damages and rights to a 5.5% royalty on all future revenues.

The Boston Herald reports that US District Judge Hilton has signed an injunction to prohibit Vonage from accepting any new customers. While it doesn't sign the death certificate of Vonage immediately, it certainly puts them on life support. Vonage's lawyer, Roger Warin, described it as the difference between "cutting off oxygen as opposed to the bullet in the head." However, Vonage's CEO Mike Snyder refuses to go quietly into the night.

"For the market to react the way it did to the recent rulings shows an unfortunate lack of understanding of the judicial/appellate system, a lack of appreciation of Vonage's resourcefulness, or, perhaps, both," Snyder said in reaction to subscriber abandonment and nose-diving stock price. "Anyone who's counting Vonage out is making a huge mistake."

Vonage plans to appeal this ruling.

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Give me a break.
By edpsx on 4/6/2007 2:56:47 PM , Rating: 4
Everyone just needs to grow up. Vonage is still a great company that I have had GREAT service with for over 3 years. Verizon is just bullying the competition so they can steal Vonage's customers. I for one, if forced to switch because of Vonage's demise, will not choose Verizon now just because of this. I may have Fios and absolutely love it, but this sure makes me hate them ever so much.

RE: Give me a break.
By ShapeGSX on 4/6/2007 3:22:07 PM , Rating: 5
I'm with you. Frankly, if Verizon prevails here, they will simply go after every VoIP company there is until they are all gone.

How can people possibly think that this is a good thing? Even if you don't like Vonage, look at the bigger picture!

RE: Give me a break.
By drebo on 4/7/2007 12:42:06 PM , Rating: 2
If Verizon were going to go after every VOIP company for patent infringement, the lawsuits would have already been announced. Perhaps Vonage really is the only company making its dime off of someone else's work. Maybe they're not. But it is completely within Verizon's rights to protect their intellectual property.

If Vonage can redo their network so that they can continue service without having to use proprietary Verizon methods, great for them! But, the patent system, flawed as it is, exists for a reason, and this is precesely that reason. Verizon has every right to force Vonage into a license agreement(the 5.5% royalty) or force them to stop all operations using patented Verizon techniques.

Think about it: if you came up with a great new way to make cheese, and your cheese was the best in the world and people were buying it by the bucket-load, you'd patent the idea. How would you then feel if every other cheese company in the US decided to start making cheese that way without first consulting you? Now, you don't have the best cheese've got the same cheese as everyone else. From a business sense, imitation is NOT the sincerest form of flattery, and Verizon is simply protecting its interests.

RE: Give me a break.
By Puddleglum1 on 4/6/07, Rating: -1
RE: Give me a break.
By edpsx on 4/6/2007 3:58:33 PM , Rating: 2
For starters, Vonage didnt bully me into anything. They offered cheaper service with the same options and quality at a lower price. And if they used "patent-infringing technology" shouldnt the company who sells the crap get sued too? If I use a linksys router in my house that doesnt mean Im using it against the patent's will. This whole suit is a bunch of crap that ends up hurting everyone in the big picture. Open your eyes and see whats going on here.

Vonage uses Cisco equipment to run their company, what the hell is wrong with that? IMO they are doing business the way EVERYONE else is on the planet. Unless you make your own equipment and then god help you if someone finds out your stuff is ANYWHERE close to what they already have a patent on.

RE: Give me a break.
By Puddleglum1 on 4/6/2007 4:24:15 PM , Rating: 3
Eyes are open, I just know that Vonage needs to be held up to the same standards that every other technology company. If you are designing technology, it has to be your own, and you have to use at least a minimal amount of research into current technology.

Vonage still has a chance, if it can change its technology to not infringe on Verizon's patent.

There was a jury that deliberated on this, so I think it's bogus to simply put this all down to injustice of our court system, or Verizon being a bully.

RE: Give me a break.
By Targon on 4/6/2007 4:50:08 PM , Rating: 2
Vonage didn't design the equipment, Cisco did. That's why this whole thing is a load of garbage.

RE: Give me a break.
By edpsx on 4/6/2007 5:00:08 PM , Rating: 2
Exactly my point. The company that should be in question here is Cisco and not Vonage. Using someone elses equipment shouldnt make you viable for anything unless its against the law.

RE: Give me a break.
By Puddleglum1 on 4/6/2007 5:24:12 PM , Rating: 2
The patents cover technology that allows calls made through the Internet to be connected to traditional phone numbers; that enable Internet phone service to use features such as call waiting and voicemail; to coordinate billing; and to connect through a wireless network.
At least some of this is done by Vonage, as hardware doesn't usually "coordinate billing."

RE: Give me a break.
By edpsx on 4/6/2007 5:37:33 PM , Rating: 2
If that is the case then I can see why if it has to do with coordinating numbers with a certain customer's account, but it just seems shady to me that Vonage has been in business for awhile and just now Verizon starts to sue them. Sounds alot like the Bluetooth suit to me. I think after X amount of years of something going on like this you shouldnt be able to sue anyone. As in the Bluetooth case it was a patent or copyright around 10 years ago. Now that its HUGE and just about in every electronic they decide, "lets sue everyone and make a bunch of money."

RE: Give me a break.
By Puddleglum1 on 4/6/2007 5:57:10 PM , Rating: 3 sheds a little light on it. The patents were from 8/02, which is less than four years before the suit was brought forward on 7/06. :(

RE: Give me a break.
By FITCamaro on 4/6/2007 3:35:34 PM , Rating: 2
I wish I had FiOS.... :(

Vonage's new song for their commercials
By jmn2519 on 4/6/2007 2:08:56 PM , Rating: 5
woohoo whoo hoo hoo
whohoo whoo hoo hoo
whohoo whoo hoo.... doh!

RE: Vonage's new song for their commercials
By Jaylllo on 4/6/2007 2:20:42 PM , Rating: 4
I always hated their obnoxious commercials.

I'm glad the courts kicked in the gonads.

RE: Vonage's new song for their commercials
By Oregonian2 on 4/6/2007 2:29:46 PM , Rating: 2
It'll be a LOT more painful than that. They'll be dead.

RE: Vonage's new song for their commercials
By fenderkb76 on 4/6/2007 5:36:58 PM , Rating: 4
Verizon: My friend doesn't like you.
Vonage: Sorry.
Verizon: I don't like you either.
Vonage: I guess I'll have to be more careful.
Verizon: But you'll be dead!

By Zelvek on 4/6/2007 7:15:37 PM , Rating: 2
Now where's obi wan when you need him.

By TheTerl on 4/6/2007 3:35:16 PM , Rating: 3
I'm a little bit curious why Verizon is seeking the injunction. After all, they've already been awarded 5.5% royalties on future earnings, in addition to the large settlement payment. Since it doesn't require any further investment, accepting those royalties sound like easy money for Verizon, at least for a while.

Do they think that if Vonage goes under, they can steal back enough customers to outweigh the profit from royalties? That seems a little unlikely, since Vonage's previous success shows that there's tremendous demand to get away from traditional (i.e. expensive) telco service. Is Verizon afraid that the patent infringement might be overturned on appeal, so they want to hurt Vonage as badly as possible right now?

I don't know, anyone else have some ideas to throw out?

RE: Motives
By SpaceRanger on 4/6/2007 3:43:55 PM , Rating: 4
All I know is that for $14.95 a month, I've been getting rock solid service for my 500 minutes a month (Which I NEVER use)... $16.19 after taxes sounded reasonable to just have a dial tone for devices that needed it (my Dish Network receiver, etc.)..

If Vonage goes belly up, I'll just not get a phone. Verizon won't see a penny from me. I can promise you that.

RE: Motives
By bigboxes on 4/6/2007 5:54:12 PM , Rating: 4
No shit. I've been very happy with Vonage. If Verizon is responsible for killing them I'll just let my land line die. Screw them and all phone monopolies. Me and the missus will just use our cell phones and they aren't tied to Verizon.

RE: Motives
By isaacmacdonald on 4/6/2007 6:17:59 PM , Rating: 2
Same here. As a former verizon residential customer, I actively hate the company. Vonage has always offered transparent billing that seems to come up to a reasonable number at the end of the month--in contrast to verizon that always nickel and dimed me with fees and surcharges and obtuse plans. If vonage goes under I'll probably look for another voip company. I'm never going back to verizon though--that's for sure.

RE: Motives
By darkpaw on 4/6/2007 3:45:02 PM , Rating: 3
Verizon basically laid blame for bleeding customers on Vonage and the jury bought it. They used some patents (that may or may not be valid) and asked for an injunction (a judge cannot perscribe a remedy that is not requested from my limited understanding of civil law) to prevent more customers from fleeing.

What they are totally overlooking is that customers are not fleeing in droves to Vonage (if they were, Vonage would actually be making money), they are dropping unneeded and badly overpriced voice lines in favor of their mobile phones as their primary number. Hell, I wouldn't have a home phone if it wasn't bundled with my cable and internet for esentially free. Before I moved into my current apt, I hadn't had a home phone line in six years.

What I want to know...
By Targon on 4/6/2007 4:44:12 PM , Rating: 2
If Vonage is being hit, then why isn't Cablevision(Optimum Voice), and every other cable company that provides VOIP service as well? Don't tell me they arn't using the same technology since the concept is identical.

People are also leaving Verizon because VOIP provides a better value. How is it they are able to get away with going after ONLY Vonage?

RE: What I want to know...
By edpsx on 4/6/2007 5:04:51 PM , Rating: 2
I wondered the same thing myself. Vonage is one of the orignal VoIP providers so maybe thats why. If they do win I imagine this will be the first of many suits to follow. Reminds me of the whole Rambus and their lawsuits they had.

RE: What I want to know...
By drebo on 4/7/2007 12:48:11 PM , Rating: 2
Uhm, perhaps because Vonage is the only VOIP provider infringing on Verizon's patents without licensing them from Verizon?

RE: What I want to know...
By Lord 666 on 4/7/2007 11:13:38 PM , Rating: 2
Or could it be that Vonage is the largest Bring your own Internet access VoIP provider?

When customers sign up for FiOS and also Verizon landline copper customers, they automatically get switched to VoiceWings. If they are Vonage customers, then Verizon doesn't have that Monthly recurring charge for VoIP service.

The patents themselves are very basic and fundemental to VoIP best practices and capabilites of 2007. Any Cisco based VoIP shop is doing or could do the same. Verizon did not invent VoIP!!!

Vonage needs to fight this one very hard.

RE: What I want to know...
By drebo on 4/8/2007 2:58:11 AM , Rating: 2
Vonage didn't invent VOIP, either. Verizon, however, put much effort into devising "last-mile" techniques that are obviously profitable for them, whether as intellectual property or in practice, though I'd bet it's both.

It doesn't matter what other services Verizon does. The plain fact of the matter is that Vonage is infringing on Verizon's patents and either needs to stop or pay royalties. There is nothing ethically, morally, or legally wrong with what Verizon is doing.

It makes me immensely glad that this liberal anti-big business bullshit hasn't made it's way into the judicial system...though I fear greatly for later generations.

Crime leads to punishment. Breaking laws leads to punishment. It doesn't matter if your customers like them or if you're the biggest kid on the block. You break the law, you have to face the consequences. Vonage tried to pull a fast one, and now they are serving their punishment.

RE: What I want to know...
By Lord 666 on 4/8/2007 10:53:28 AM , Rating: 2
That's my point exactly; VoIP is based on several industry standards. No one company invented VoIP. Sending RTP packets over 802.11 or even CDMA connection should be patentable? Using gateways to convert packetized voice to convert to PSTN should be patentable? Both are industry standards, dating back to even 2002 when the patents where granted.

This is not liberal anti-big business, its Verizon's selective pursuit against Vonage when there are many others that make use of these industry standards that the USPO claims are unique to Verizon and interpeted by one human that has no clue about VoIP as unique to Verizon.

Based on these patents, Verizon also has to pursue Cisco as well, doubtful they will since I know for a fact that Verizon uses many Cisco VoIP technologies for their core businesses.

RE: What I want to know...
By drebo on 4/8/2007 11:04:10 AM , Rating: 2
The patents involved are for a specific IMPLEMENTATION of the idea, not the idea itself.

Of course you shouldn't be able to patent something as broad as "sending voice packets over 802.11 or CDMA", but that's not the question here. The question is whether or not Vonage took patented Verizon technologies and used them without permission.

According to this judge, the answer to that question is "yes". Common sense dictates that since Vonage is the only VOIP provider under the gun for these patent infringements, they must be the only ones using them. There is more than one way to skin a cat, and not all of them are patented. Find one that's not, or license one that is. The legal costs of fighting separate companies in separate cases for the same infraction makes it highly unlikely that Verizon is waiting to sue any other company.

Vonage is not the end-all-be-all of VOIP providers. They're simply one in dozens, which, even combined, do not pose any sort of threat to Verizons existing customer base.

By cochy on 4/6/2007 2:21:04 PM , Rating: 2
"cutting off oxygen as opposed to the bullet in the head."

So which would you prefer? Suffocating to death slowy, or quickly with the gun?

Admittedly Vonage is in for a slow and painful death here.

RE: Uh
By Scorpion on 4/6/2007 2:42:20 PM , Rating: 3
After reading this article I immediately got this mental image of Mike Snyder as Baghdad Bob.

Good time to be a Vonage customer?
By pcycho on 4/6/2007 3:33:06 PM , Rating: 2
First off, I have been very pleased with my service from Vonage. If the injunction goes through, I would think that they would treat their remaining customers like royalty to maintain their current revenue stream. I don't expect to see rate cuts, as they will need all the revenue they can muster, but I do expect to see 'value added' to my current subscription (e.g., 800 service, additional numbers) at no additional charge.

I can not really comment on the Verizon case as I have not read into the details. It always rubs me the wrong way though when the corporate giant squashes the little guy.

Vonage will be missed should they lose their appeals.

By cubby1223 on 4/6/2007 4:19:42 PM , Rating: 2
What?!! Vonage is loosing money at an insane rate. Don't think they'll treat their current customers like royalty. More likely they'll try to screw you at every chance before folding.

Ruling temporarily stayed....
By hopsandmalt on 4/8/2007 11:40:21 AM , Rating: 2
Vonage today secured a temporary stay from U.S. Court of Appeals for the Federal Circuit in Washington, DC. The stay enables Vonage to continue to sign up new customers until the Appellate court can hear Vonage's request for a permanent stay. The Court's ruling allows Vonage to continue to provide phone service to existing customers.

By fxnick on 4/6/07, Rating: -1
RE: vontage=crap!
By ricera10 on 4/6/2007 11:14:34 PM , Rating: 2
Instead of Vontage, you might want to switch to Vonage; they have a very good record of good sound quality and reliable service.

RE: vontage=crap!
By Xietsu on 4/7/2007 2:59:20 AM , Rating: 2
Haha, you people are ridiculous, trying to clear your poor experience-attached emotions for hopes with a company that has done nothing wrong in the grand scheme. Not even an issue of warning for their subjective clamation and they are expecting to gather support for their charges when there are also numerous other parties in the exact position as Vonage. Verizon is ludicrous and I'm sad my relatives use their service.

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