A federal court has ordered the Vonage Holdings Corporation, the Internet phone provider, to pay $58 million for infringing Verizon’s patents, dealt a heavy blow to loss-making company that already showing signs of strain. Vonage has infringed on three patents held by Verizon Communications and the jury ordered the company to pay 5.5 percent possible future royalties to its competitor in addition to the punitive payment.
In reaction to the judgment the company has stated that it would go for appeal to overturn the judgment. Earlier the company had said that Verizon’s patents were invalid and that the law suit was ‘a transparent attempt to smother one of its most successful competitors.’
The decision and expected ruling preventing Vonage from using Verizon technology without paying the fixed royalty fee are expected to take a big financial toll and it would definitely squeezed profitability targets. In addition to it, they could also undermine customer confidence and make Vonage and other Web-calling providers vulnerable to other lawsuits.
The patent infringement lawsuit was one of several filed against Vonage, the largest and most successful of the independent VoIP phone companies. In the suit, Verizon contended that it owed $197 million in compensation for infringement of five patents on technology developed by Verizon engineers in the mid-1990s. While defending the suit Vonage argued that the patents were invalid. However, the jury rejected claims that Vonage violated two patents related to billing functions.
