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Vonage can hear Verizon now after losing infringement lawsuit

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 networks.

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 service.

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.



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RE: VoIP in general
By hands on 3/25/2007 5:19:22 PM , Rating: 1
A lot of people complain about how backwards the U.S. is in terms of certain technologies, such as wireless networks. The biggest reason is because U.S. law was written in a way that for rural development to occur in certain cases, various utilities such as electricity and telephone lines must be paid for and funded by commercial entities wanting to move into those areas. The U.S. now has a very well developed network of traditional phone lines, but newer technologies are considered luxuries. Therefore, in the past, it has been cheaper and more reliable to get a traditional phone than a cell phone.

OTOH, in places where traditional phone lines aren't as ubiquitous, cell phone towers were/are much cheaper to construct than a wired network.

Now that wireless networks and the internet are ubiquitous (in developed areas of the world, including the U.S.), traditional phones don't make a lot of sense from an installation perspective. Traditional phones are no longer the cheapest option, and they certainly aren't as flexible as other options. So, I would agree that the traditional phone system is slowly becoming as obsolete as the telegraph.


"Well, we didn't have anyone in line that got shot waiting for our system." -- Nintendo of America Vice President Perrin Kaplan

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