June 19th, 2006
EXCLUSIVE: Verizon to Court: halt Vonage sales, services- and we have the complete details
The Verizon patent infringement suit against Vonage, revealed today but filed last Monday in the U.S. Appeals Court for the Eastern District of Virginia, asks the Court to:
"Enter a permanent injunction, pursuant to 35 U.S.C. 283, restraining and enjoining Defendants Vonage Holdings and Vonage America and their respective officers, agents, servants, employees, attorneys, customers and those in concert or participation with them from any further sales or use of their infringing products and services and any other infringement of Verizon’s Patents, whether direct or indirect."
Here’s a link to a PDF of the entire complaint. In this post, I’ve included some highlights of Case No: 1:06CV682- namely points 25-30 of the suit:
25. Vonage is currently infringing, in the United States, including in this Judicial District, as well as contributing to and inducing the infringement of, at least seven of Verizon’s patents relating to VoIP technology (collectively "Verizon Patents." The Verizon Patents are attached to this Complaint as Exhibits A-G.
26. Vonage has unfairly capitalized on Verizon’s investment in VoIP research and development by using Verizon’s patented technology in its VoIP service offerings, including Verizon’s inventions relating to (a) gateway interfaces between a packet-switched and circuit-switched network, which is critical to implementing commercially viable VoIP telephony; (b) billing and fraud detection in commercial VoIP telephony; c) call services in commercial VoIP telephony, such as call forwarding, follow me, and voicemail; and (d) methods relating to the use of Wi-Fi handsets in a VoIP network.
27. Through its product and service offerings, Vonage has appropriated the results of years of research conducted by Verizon and its predecessors. Vonage does not currently own any issued U.S. patents. Instead, Vonage relies on the intellectual property developed by Verizon in delivering its infringing product and services.
28. Vonage is aggressively marketing and advertising the services created with Verizon’s appropriated intellectual property. Vonage’s marketing and advertising targets customers of Verizon. As a direct result of its "saturation" marketing and advertising campaign, Vonage currently serves an estimated 47% of all domestic non-cable VoIP customers. Vonage’s success in offering VoIP services, and its ability to provide such services to U.S. telephony consumers, are direct results of its unauthorized use of Verizon’s patented technology.
29. Vonage has gained 1.1 million new customers- many of whom are Verizon’s former customers- in the last 15 months. In the first quarter of 2006 alone, Vonage gained approximately 325,000 new subscribers. Since its inception, Vonage has spent over $400 million on online, television, print, radio and other advertising and marketing.
30. Recently, Vonage raised over $500 million in an Initial Public Offering launched on May 24, 2006. Vonage announced in its SEC filings that it intends to spend the bulk of that money expanding its marketing and advertising of its infringing services. Vonage’s expanded marketing and advertising of its infringing services threaten to shift more customers and goodwill to its business at Verizon’s expense.
Update: Vonage stock ended today at $8.48 a share, marking the beleaguered issue’s first close at less than half the $17 a share IPO price.
Russell Shaw is an enterprise computing journalist, analyst and author based in Portland, Oregon. See his full profile and disclosure of his industry affiliations.
