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Ruling May Be End for Vonage
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"If Vonage tries to implement a work-around, it's entirely likely Verizon will come right back and say that work-around violates our intellectual property and they'll be right back in front of a judge," she said.
Sharon A. O'Leary, Vonage's executive vice president and chief legal officer, said the company's appeal would center on how broadly the judge defined the scope of Verizon's patents.
"We remain confident that Vonage has not infringed on any of Verizon's patents, a position we will continue to vigorously assert in federal appeals court," she said, adding that Vonage developed its service using publicly available, off-the-shelf technology.
In a brief statement, John Thorne, Verizon's deputy general counsel, welcomed Hilton's ruling. "We're pleased the court has decided to issue a permanent injunction to protect Verizon's patented innovation," he said.
The brunt of the court ruling, if upheld on appeal, would be felt by Vonage's domestic customers because U.S. patent law applies only within the United States. But overseas customers could also see some of their service affected if the ruling disrupts the company's ability to provide international calling.
If Vonage fails to win a stay or offer a practical work-around, the New Jersey company could still seek to settle with Verizon by agreeing to license the disputed technology. In its March 8 verdict, the jury ordered Vonage to pay 5.5 percent of its revenue as royalties for the technology. But Verizon, now in a stronger bargaining position because of yesterday's ruling, would likely demand a higher percentage.
John Rabena, a patent expert at the Washington law firm of Sughrue Mion, said Vonage might be interested in reaching a licensing agreement despite the cost. He added it's still uncertain whether Verizon would throw Vonage a lifeline by agreeing to license the patented technology.
He said it also remains unclear whether Verizon will use the court rulings to put other smaller Internet competitors out of business. "What it means for other VoIP providers, they could be next," he said. "It depends on what Verizon is interested in."
