Feeds

Appeal judge moots 'middle ground' in Vonage patent flap

Asks if provisions for 'workaround' are appropriate

Maximizing your infrastructure through virtualization

The black clouds that for the last three months have been hanging over VOIP service provider Vonage parted ever so slightly today, allowing through the tiniest sliver of sunshine as a federal appeals judge raised the possibility of a compromise in its patent war with Verizon.

Those following the dust-up will remember that a lower court jury in March ruled that Vonage's voice over internet protocol (VOIP) services violated three Verizon patents covering technologies for internet-routed phone communications. Vonage was subsequently barred from signing up new customers, a prohibition that raises the very real possibility the VOIP upstart could go out of business.

"Isn't there kind of a middle ground in these cases when the injunction would put someone out of business?" Judge Timothy B. Dyk of the US Court of Appeals for the Federal Circuit, asked a Verizon attorney at a hearing Monday, according to the Associated Press. "Shouldn't there be a consideration? Shouldn't the district court consider allowing time for a workaround as part of the injunction."

Vonage shares ended the day at $3.09, a 1.3 per cent rise, while Verizon's stock fell a fraction of a per cent.

That Vonage and its shareholders are pinning hope on comments as noncommittal as Judge Dyk's demonstrates just how bleak life has grown for the company. In a market with high subscriber churn, customer acquisition is a matter of survival. The lower-court injunction forbidding Vonage from signing up new customers, while on hold pending appeal, would most likely prove fatal if put into effect.

What's more, Vonage, which last year racked up a net loss of $286m on sales of $607m, has been ordered to pay Verizon $58m in damages and an annual royalty of 5.5 per cent of future revenue. Faced with these prospects, its only natural for Vonage to take solace where the company can get it.

Of course, it's always risky to predict judicial outcomes based on the questions of judges. And besides, focusing solely on Dyk's comments fails to take into account the long-shot strategy Vonage's legal generals have devised for victory. Indeed, Vonage never even asked for the sort of compromise Dyk was hypothesizing.

Instead, they argue that the entire jury verdict finding infringement should be invalidated because the trial judge provided flawed instructions to the jury. Specifically, Vonage attorneys say US District Judge Claude Hilton failed to provide the jury with adequate definitions for some of the technical terms contained in the patents.

That could provide Vonage another shot at convincing a jury that the patents - which cover methods for translating between IP addresses and phone numbers and connecting a wireless device to a VOIP network - concern obvious innovations that by definition are not eligible for patent protection.

One reason Vonage appears to be putting most of its appeals eggs in the invalidation basket has to do with a US Supreme Court ruling delivered in April. It simplified the basis under which trial courts can determine what is obvious in a patent. Vonage attorneys were granted permission to incorporate the decision into their appeal even though the Supreme Court ruling was issued after the jury rendered its decision in spat with Verizon.

In light of today's quizzing from Judge Dyk, it would appear Vonage may have been presented with another way out of the impasse. ®

The Essential Guide to IT Transformation

More from The Register

next story
Yorkshire cops fail to grasp principle behind BT Fon Wi-Fi network
'Prevent people that are passing by to hook up to your network', pleads plod
Major problems beset UK ISP filth filters: But it's OK, nobody uses them
It's almost as though pr0n was actually rather popular
Apple orders huge MOUNTAIN of 80 MILLION 'Air' iPhone 6s
Bigger, harder trouser bulges foretold for fanbois
Google Nest, ARM, Samsung pull out Thread to strangle ZigBee
But there's a flaw in Google's IP-based IoT system
US freemium mobile network eyes up Europe
FreedomPop touts 'free' calls, texts and data
'Two-speed internet' storm turns FCC.gov into zero-speed website
Deadline for comments on net neutrality shake-up extended to Friday
Oh girl, you jus' didn't: Level 3 slaps Verizon in Netflix throttle blowup
Just hook us up to more 10Gbps ports, backbone biz yells in tit-for-tat spat
Want to beat Verizon's slow Netflix? Get a VPN
Exec finds stream speed climbs when smuggled out
prev story

Whitepapers

Seven Steps to Software Security
Seven practical steps you can begin to take today to secure your applications and prevent the damages a successful cyber-attack can cause.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
Designing a Defense for Mobile Applications
Learn about the various considerations for defending mobile applications - from the application architecture itself to the myriad testing technologies.
Build a business case: developing custom apps
Learn how to maximize the value of custom applications by accelerating and simplifying their development.
Consolidation: the foundation for IT and business transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.