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Vonage ordered to pay $58m in Verizon patent flap

Vonage 'delighted' damage wasn't more

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A US District Court jury said Vonage Holdings violated three patents held by Verizon Communications and ordered the VoIP telephony company to pay $58m in damages and annual royalties.

If upheld on appeal, the award could represent a considerable crimp in operations for Vonage, which last year racked up a net loss of $286m on sales of $607m. A requirement to pay a royalty of 5.5 per cent of future revenue for any ongoing infringement obviously wouldn't help, either.

The jury has yet to decide if Verizon is entitled to an injunction prohibiting Vonage from using technologies covered by the patents, a decision that could be still more damaging to the smaller company.

Verizon had sought damages of $197m for Vonage's alleged infringement of at least five patents, which were related to technologies for internet-routed phone communications, including those that connect calls to ordinary phone lines and more traditional features such as call forwarding. Verizon said it has lost hundreds of thousands of customers as a result of Vonage, which has about 2.2 million customers.

Ever the optimists, Vonage responded to the verdict with a press release announcing it was "delighted" the jury hadn't found even more of Verizon's patents infringed. "Of the seven patents Verizon originally sued on, they prevailed on only three and we expect that verdict to be reversed on appeal," the company said. It also noted that $58m was only 30 per cent of the original sum Verizon sought.

In more substantial remarks, Vonage said it would ask an appeals court for a stay should the jury issue an injunction. "Vonage's customers should see no change to any aspect of their phone service," the company said.

Vonage had argued Verizon's patents were invalid and that even if they were legit, Vonage didn't infringe them anyway. The jury rejected the first prong of that argument, finding all the patents in the case were valid.

In addition to technologies that route Internet calls to traditional phone systems, and those that provide voicemail and call forwarding, the patents also covered the use of Wi-Fi networks for Internet phone service. ®

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