A suit filed in June by Verizon Communications against
Vonage made its way to court last week. Verizon claimed that Vonage
infringed on several patents including the technology Vonage used to
connect phones from its Internet Protocol service to traditional phone
Vonage claims it had never violated any of Verizon patents,
saying that it has been using third party technology that is already the
standard throughout the industry. One of the such is the voice gateways
from Cisco Systems, to route voice traffic over the internet.
The final decision made by a federal judge
stated that Vonage Holdings Corp. must pay out $58 million in damages
to Verizon along with 5.5% future revenues royalty for any continuing
infringements, according to a press release.
The decision came from the U.S. District Court of the Eastern District
of Virginia, filing the infringements of three of the five patents
under consideration.The number of Vonage subscribers dropped
from 256,000 from the second
quarter of last year to 204,591 in the third quarter and then to
166,000 in the
fourth with is Q4 loss from $72 million last year to $65 million this
year. Company executives say this is partly due to the bust of the
company's commercials. The next step is to replace the commercials and
design infomercials that use customer testimonials to promote the
The pull themselves out of the hole, Vonage formed an agreement early this year
with Earthlink to begin reselling wireless broadband in Earthlink’s covered
cities. To add to diversity of the companies marketing, Vonage executives
have also mentions the company's stake in dual-mode handsets that will allow
VoIP along with cell phone calls.
"We are confident in Vonage's future health, growth prospects and longevity,"
said Jeffrey R. Citron, Vonage's chairman and chief strategist.
Vonage has announced that it is not going out of business and its service will not be disrupted.
Currently, Judge Claude Hilton issued a permanent
injunction against Vonage. The reason behind the injunction is that
the judge believes that providing monetary damages "does not prevent
continued erosion of the client base of the plaintiff." The injunction
will not formally be entered for another two weeks, said Hilton.
Vonage is requesting to stay the injunction of either 120 days or until its appeal is heard.