TELECOM Digest OnLine - Sorted: Verizon-Vonage Patent Case in Hands of Jury

Verizon-Vonage Patent Case in Hands of Jury

Peter Kaplan, Reuters (
Wed, 07 Mar 2007 22:25:55 -0600

By Peter Kaplan

A federal jury on Wednesday began reviewing evidence in Verizon
Communications Inc.'s $197 million patent infringement case against
Internet phone service provider Vonage Holdings Corp.

The eight-member jury deliberated for about three hours and sent the
judge several notes asking for clarification of some terms used in the

Although the panel asked to work into the night, U.S. District Judge
Claude Hilton sent jurors home and said deliberations would resume at
10 a.m. ET (1500 GMT) on Thursday.

In closing arguments, a lawyer for Verizon told jurors that Vonage had
built its business based on Verizon's patents and said Vonage should
be forced to pay damages.

Going forward, Vonage also should be ordered to pay Verizon a royalty
of $4.93 per telephone line per month for its voice-over-Internet
protocol (VoIP) technology, said Verizon lawyer Dan Webb.

"This company has done very well with our patents and our technology
for a number of years," Webb told jurors.

Verizon claims that Vonage is infringing on five patents on technology
devised by Verizon engineers in the mid-1990s that is central to
Internet phone service.

The patents cover technology that allows calls made through the
Internet to be connected to traditional phone numbers; that enable
Internet phone service to use features such as call waiting and
voicemail; to coordinate billing; and to connect through a wireless

Vonage insists that Verizon's patents were invalid and were not
infringed upon by the Vonage system.


Vonage's lawyer, Roger Warin, said Verizon is using the patent
infringement allegation to try to destroy Vonage and thwart

"We didn't take their (intellectual) property," Warin said.

Warin provided for jurors what he said were differences between the
technology that Vonage uses and the patents owned by Verizon.

And Verizon's patents were invalid anyway, he said, because the
technology was invented earlier by Net2Phone, another provider of VoIP

If the jury finds that Vonage infringed Verizon's patents, the judge
could issue an injunction barring Vonage from using the technology.

Vonage has said that the outcome of the case would not disrupt its

One investment advisory firm said the lawsuit is important because it
spotlights the extent to which VoIP relies on open standards rather
than proprietary technology. "The outcome of the case against Vonage
will likely spill over to the larger VoIP sector," said Stifel
Nicolaus & Co in a report.

Vonage has struggled to turn a profit, and its share price has fallen
sharply since its initial public offering last May at $17. On
Wednesday afternoon, Vonage edged down 17 cents to $5.05 on the New
York Stock Exchange.

Copyright 2007 Reuters Limited.

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