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September 27, 2007

Vonage is Hit by Two Patent Decisions Against It

Vonage suffered a stinging defeat in the Circuit Court of Appeals for the Federal Circuit on September 26th.  Vonage appealed a decision against it when Verizon sued the company for infringement of three patents it claimed Vonage used in implementing its Internet telephony service.  The trial court held the Vonage did violate the three patents.  It awarded damages of $58 million and a 5.5% royalty on future infringing sales, and an injunction on future use of the patented technology.  The appeals court upheld the findings on two of the three patents and vacated the damages pending further proceedings in the trial court to recalculate damages.  News reports indicate that the overturned claim is the least of the claims against Vonage and suggest that the recalculated damages could be just as large.

The day before, Sprint/Nextel won another patent case against Vonage involving six patents belonging to Sprint.  That resulted in a $69.5 million damage award.  Vonage expects to appeal this decision.

Analysis is in Business Week.  The Appeals Court decision is here.

September 27, 2007 | Permalink


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Pity that this debacle is giving the entire VoIP segment a black eye because there are great companies out there that focused on the technology and not the “sizzle”. Hey, I liked the Vonage commercials as much as the next guy, I only wish they had spent more time and money making sure they had the rights to use the technology they did. I still like the idea of VoIP and finding alternatives is hard because I don’t want to be stranded like many Sunrocket customers were recently. It seems there are good alternatives like Net2Phone and Lingo, but it is really too bad that such a high profile provider will probably set this whole category back in people’s minds.

Posted by: Jeremy | Oct 6, 2007 2:14:08 PM

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