Jury Finds Vonage Infringed on Three Verizon Patents

A federal jury on Thursday found that Vonage Holdings, an Internet-based phone service, infringed on three key patents owned by Verizon Communications.

The eight-member federal jury also said Vonage must pay a 5.5% royalty rate on Vonage sales going forward.

Verizon had sought $197 million in damages and a 19% royalty rate from Vonage for infringing on five patents related to voice-over-Internet Protocol (VoIP) technology. VoIP services allow consumers to make calls over the Internet.

After a day of deliberations, jurors concluded that Vonage infringed two patents covering technology to connect Internet calls to the traditional phone system and for features such as call-waiting and voice-mail. The jury said Vonage also infringed on a third patent involving wireless Internet phone calls.

Jurors rejected Vonage's contention that Verizon's Internet phone patents are invalid, and said that Vonage had not infringed on two other patents at issue in the case.
Vonage said it would appeal the jury verdict. Its customers "should see no change" in any aspect of their phone service, Vonage said.

U.S. Judge Claude Hilton set a hearing for March 23 to hear arguments on whether he should issue an injunction barring Vonage's use of the technologies covered by the patents.

"We don't believe there is any basis to support Verizon's request for an injunction," Vonage said in a statement. "If the trial court does impose an injunction, we will seek an immediate stay from the federal court court of appeals."

Among its findings, the jury said that Vonage was not "willful" in its infringement of the three patents, a legal determination that could have led to stiffer penalties.

Verizon said it welcomed the decision.

"Patents encourage and protect innovations that benefit consumers, create jobs, and keep the economy growing. Verizon's innovations are central to its strategy of building the best communications networks in the world," John Thorne, a Verizon lawyer, said in a statement.

Vonage, which said it did not infringe on Verizon patents, reported a net loss of $65 million for the last quarter.

After the jury decision was announced, Vonage shares tumbled 10% before recovering to $4.85, down nearly 4 percent, when trading was halted.