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Vonage Has One of Those Weeks |
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Written by Adam Gosling
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Thursday, 27 September 2007 |
It was another bad news week for
U.S. VoIP service provider Vonage, but there was a little good news
mixed with the bad. The company lost the first round of its patent
infringement lawsuit with Sprint Nextel, but had a minor win on appeal
in its patent suit with Verizon.
First the good news. Vonage
lost a court case back in March in which a District Court Jury found it
infringed on three Verizon patents. It was slugged with a heavy damages
bill and Verizon got an injunction stopping Vonage from using the
infringing technology.
On appeal however, the Appellate Court
agreed with Vonage for one of the Patents and has passed the case back
to the lower court for review. It also vacated the entire award of $58
million in damages and the 5.5%
royalty. Nearly US$90 million is currently being held in escrow pending
the ultimate outcome of the case and it would help Vonage if it could
get some of this back by having the lower court affirm that the third
patent wasn't being infringed.
Vonage
says it has implemented workarounds for these technologies so what is
at issue is the amount of damages rather than survival of the service.
"We
thank the appellate court for its thoughtful consideration of the
merits of our case," said Vonage's Chief Legal Officer, Sharon O'Leary.
"We are pleased with the decision to vacate the 880 patent and the
damages. However, Vonage remains confident that it has not infringed on
the 880 patent -- a position we will continue to vigorously assert and
look forward to presenting at trial."
But
now the bad news. The Sprint Nextel case in which it was alleged that
the Vonage's broadband telephony service infringed on six of Sprint
patents was upheld in the U.S.
District Court in Kansas City. The jury found Vonage guilty of
infringing all six voice-over-packet patents at issue in the case and
awarded Sprint Nextel US$69.5 million in past damages and a five
percent royalty on future revenue.
The experts says that the trouble with the Sprint
Patents (from the Vonage point of view anyway) is that they are very
broad and a workaround as was implemented in the Verizon case, might
not be so easy to achieve. While the court awarded Sprint a five per
cent royalty on future Vonage royalties, it seems likely that the
company will apply for an injunction against Vonage even using the
technology, which critically covers the translation of packet-based
VoIP calls onto the circuit switched PSTN.
www.verizon.com
www.sprint.com
www.vonage.com
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