Verizon Sues Vonage Over Patents

Posts: 13 · Vonage Forum Associate Joined: Jan 17, 2006 Posts: 13

Verizon Sues Vonage Over Patents
A WALL STREET JOURNAL ONLINE NEWS ROUNDUP
June 19, 2006 11:02 a.m.

Internet telephone provider Vonage Holdings Corp. said it has been served with a patent-infringement lawsuit filed by two units of Verizon Communications Inc. Vonage shares tumbled Monday.

Adding to its woes since its troubled IPO last month, the lawsuit from Verizon Service Corp. and Verizon Laboratories Inc. alleges that Vonage infringed on seven patents related to voice over Internet protocol, or VOIP, technology.

Holmdel, N.J.-based Vonage vowed to "vigorously defend" the lawsuit. The company said it had not previously been notified by Verizon about the patents and believes it has relied on its own proprietary technology.

...

Remainder at WSJ.COM

Posts: 243 · Vonage Forum Master Joined: Jan 18, 2004 Posts: 243

You should also mention that Verizon has never once said anything about patent infringement in the past.

I've read some articles where some think that this is Verizon's chance to kick Vonage while they are down regardless if the suit has any merits. Word is that Verizon is feeling the pinch of the price wars that Vonage has been doing.

Posts: 94 · Vonage Forum Senior Joined: Jun 17, 2006 Posts: 94

manse wrote:

Verizon Sues Vonage Over Patents
A WALL STREET JOURNAL ONLINE NEWS ROUNDUP
June 19, 2006 11:02 a.m.

Internet telephone provider Vonage Holdings Corp. said it has been served with a patent-infringement lawsuit filed by two units of Verizon Communications Inc. Vonage shares tumbled Monday.

Adding to its woes since its troubled IPO last month, the lawsuit from Verizon Service Corp. and Verizon Laboratories Inc. alleges that Vonage infringed on seven patents related to voice over Internet protocol, or VOIP, technology.

Holmdel, N.J.-based Vonage vowed to "vigorously defend" the lawsuit. The company said it had not previously been notified by Verizon about the patents and believes it has relied on its own proprietary technology.

...

Remainder at WSJ.COM

I used to have a verizon account. My monthly bill averaged $60 to $90 per month. I was pissed since I don't even use my landline phone very much. I use my Sprint cellphone.

After switching to Vonage, Verizon hasn't seen a cent from me for over 1.5 years. They must be angry. Angry enough to go for Vonage's throat.

The problem here is that, I'll never go back to Verizon for phone service. Those days are over.

Posts: 3 · New Forum Member Joined: May 22, 2006 Posts: 3

My business once had four phone lines with Verizon. We switched three of the four lines over to Vonage back in February 2004. This immediately started saving us over $300 per month. I would never switch back to Verizon. Our service with Vonage is much more reliable. We kept one line with Verizon to maintain our yellow pages ad . That one line cost more then the three lines with Vonage.

Posts: 13 · Vonage Forum Associate Joined: Jan 17, 2006 Posts: 13

I too am saving some $$. I switched from verizon to vonage almost a year ago.

I keep seeing bad news like this, and I dread having to switch back.

Posts: 29 · Vonage Forum Junior Joined: May 30, 2006 Posts: 29

The news apaprently scared the investors. Stock down to $8.50 and is still expected to slide. If this keeps up, the Verizon threat is all that will be needed to shut the doors.

Posts: 1 · New Forum Member Joined: Jun 19, 2006 Posts: 1

Ridiculous, so we all will be force to Verizon/BB???

so far, I'm a passive reader on this forum, But as a satisfied customer for 3-4 years, I can't stand to see vonage being treated like this!

Before Vonage, No telephone company ever have an interest to pass savings from VoIP technology to us as customer. Before Vonage,None of us will ever dream to have unlimited calling to Europe, not even unlimited calling to US states!

RSK

Posts: 30 · Vonage Forum Junior Joined: May 21, 2006 Posts: 30

rsk wrote:

Ridiculous, so we all will be force to Verizon/BB???

No one can force you to do anything you don't want to do. There are other options besides the phone company if Vonage folds.

There are plenty of other VOIP providers
Computer-based phones
Use a mobile phone only. No more landline.

I'm considering SunRocket VOIP if Vonage folds. I will keep Vonage for as long as I can, but if the writing is on the wall that the company will be out of business in a matter of a few months, then I will be looking into SunRocket or one of the other dozen VOIP providers.

Posts: 66 · Full Forum Member Joined: May 25, 2006 Posts: 66

Quote:

I've read some articles where some think that this is Verizon's chance to kick Vonage while they are down regardless if the suit has any merits.

I don't think so. Traditionally with patent litigation the patent holder would wait until a fish was big enough before suing - it's a commercial decision. The bigger the infringing company/person, the bigger the likely damages payout/licensing settlement.

Here I think Verizon were simply playing that waiting game. The stock tanking has made Verizon realise that if they don't get in now, there might not be a comany left to sue.

It's about getting cash while there's still a bank account with some cash in it.

Posts: 111 · Vonage Forum Senior Joined: Jun 15, 2006 Posts: 111

As a lawyer (not a patent one, but friends with several) I will tell you these suits can be very damaging. Verizon can and will hire very good lawyers, and the fight will be extremely distracting and costly for a company like Vonage that is losing money very quickly and does not have access to profits or capital markets where it can obtain more.

A patent lawyer runs from $280 (for someone right out of law school) to $800 an hour (a senior partner). Plus expenses, plus a very high hourly rate for paralegal work.

IMO the best thing VG can do now is buy VZ off for a few million dollars in return for not waiving the suit, but tolling it for two years. That is more than VZ could expect to ever get from the suit since VG is heading for bankruptcy in less than the 2-4 years it takes to litigate a patent suit, and it would save VZ the legal bills without waiving its claims to the intellectual property.

Of course if VZ's just wants to crush VG into the ground, they won't be willing to do that, and that just may be what they are trying to do with this.

The idea that VZ is shorting VG stock, however, is crazy. Telecom companies don't short each others' stock. It just isn't done.

The reason this can really sting VG is that it means no matter how cheap the stock gets, no company would ever want to buy it out, not even for 50 cents a share, since buying the company also means buying its potentially huge legal liabilities.