SunRocket Sues Vonage Over Use of Customer List

By Kim Hart
Washington Post Staff Writer
Friday, August 24, 2007

When Internet phone start-up SunRocket suddenly closed its doors last month, several competitors offered special rates and other incentives to attract its former customers. Now the company in charge of selling SunRocket's assets has sued its biggest competitor, Vonage Holdings, over claims that it obtained and used a customer list without permission.

SunRocket of Vienna ceased operations July 16 and recommended that its 200,000 customers move to other Internet phone service providers. Vonage had been exploring business arrangements with SunRocket, including buying its subscriber base and other assets. But after talks failed, Vonage broke a confidentiality agreement by using SunRocket's customer list to solicit its former subscribers, SunRocket alleged yesterday in a complaint filed in a Delaware court.

SunRocket said that its customer list is "one of its single most valuable remaining assets," and that Vonage's use of the list has caused "immediate and irreparable harm and injury" to the company. SunRocket asked a judge to force Vonage to return the list and award monetary damages.

Vonage acknowledges the confidentiality agreement with SunRocket but said it bought the customer list from a third-party broker, Paradysz Matera of New York, after SunRocket shut down. Such lists are often used as a standard marketing practice, said Charlie Sahner, a spokesman for Vonage.

"We obtained the subscriber list through an established broker, and we were assured the data was legally obtained and could be used without violating anyone's proprietary rights," Sahner said. "There is no connection to the [confidentiality] agreement."

Sherwood Partners of Palo Alto, Calif., is handling the sale of SunRocket's assets. The company said former customers have complained about Vonage's solicitation of their business. The company also said that the use of the customer list threatens SunRocket's agreement with Internet phone companies Unified Communications and 8x8 to transfer customers' phone service.

Sherwood said many customers think it has released the list to Vonage.

"Customers are concerned that Sherwood is selling their personal information to obtain capital in the SunRocket liquidation," which could expose the company to customer lawsuits, SunRocket said in the complaint.

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