TELECOM Digest OnLine - Sorted: Verizon Accuses Vonage of Infringment

Verizon Accuses Vonage of Infringment

Jeffrey Gold (
Mon, 19 Jun 2006 13:33:33 -0500

By JEFFREY GOLD, AP Business Writer

Verizon Communications Inc. has charged that Internet phone carrier
Vonage Holdings Corp. violated patent rights that Verizon has on
technology for making phone calls over the Internet.

The lawsuit was filed in U.S. District Court in Richmond, Va., on
behalf of subsidiaries Verizon Services Corp., of Arlington, Va., and
Verizon Laboratories Inc., of Waltham, Mass.

Holmdel-based Vonage, which said Monday it had been sued, contested
the claim. "Vonage believes that its services have been developed with
its own proprietary technology and technology licensed from third
parties and intends to vigorously defend the lawsuit," the company
said in a statement.

Vonage spokesman Mitchell Slepian declined to comment further.

Vonage stock dropped more than 9 percent in trading Monday afternoon
on the New York Stock Exchange, the latest blow to shares that have
lost about half their value since the company went public in late May.

Verizon charged that Vonage is infringing on at least seven of its
patents regarding Internet phone service, a technology known as voice
over Internet protocol, or VoIP. The patents include inventions
related to gateway interfaces between a packet-switched and
circuit-switched network, billing and fraud detection, call services
such as call forwarding and voicemail and methods related to Wi-Fi
handset use in a VoIP network, the lawsuit said.

The complaint, filed June 12, also claimed that "Vonage is
aggressively marketing and advertising services made with Verizon's
appropriated intellectual property."

Vonage has added 1.1 million new customers in 15 months, "many of whom
are Verizon's former customers," the lawsuit said.

Vonage's plan to use funds from its initial public offering to expand
its marketing and advertising on services that infringe on Verizon
patents threatens "to shift more customer and goodwill to its business
at Verizon's expense," the complaint stated.

The action by Verizon, the country's largest telecommunications
company by revenue, follows a shareholder class-action lawsuit that
claims Vonage improperly steered consumers toward investing in its
$531 million initial public offering.

Shares of Vonage tumbled 91 cents, or 9.5 percent, to $8.69 and a
52-week low in afternoon trading on the NYSE. The stock has been
trading in a 52-week range between $9.60 and $17.25. Verizon shares
gained 9 cents to $32.63 in afternoon trading on the NYSE.

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Copyright 2006 The Associated Press.

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