Things do not look good for Vonage. Yesterday, they lost their request for reconsideration of their settlement with Verizon. This means Vonage owes Verizon $120 million to end the patent lawsuit filed against them. The costs associated with defending the case have cut into Vonage’s bottom line, and despite attempts to cut costs by laying off 10% of their workforce, they may be unable to make a payment against their debt come December. According to the settlement, Vonage will pay $117.5 million to Verizon and another $2.5 million dollars to charity. Vonage’s shares have dropped 87% since their IPO, now hovering around $1.50 per share.
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Tag: VonageScoring an important win in its ongoing patent battle with Verizon, VoIP provider Vonage on Tuesday won a permanent stay of a previous court’s injunction, meaning simply that Vonage is free to conduct business as usual while it pursues an appeal of the original ruling that found it had infringed some of Verizon’s VoIP patents.
The permanent stay was issued by the U.S. Court of Appeals for the Federal Circuit in Washington D.C., which had earlier granted Vonage a temporary stay so it could argue its case further. Vonage sought the stay after being hit with an injunction by a U.S. District Court in Virginia, which would have kept Vonage from signing up new customers or using the infringed technologies.
As the appeals process winds on, Vonage will put into escrow the 5.5 percent royalty fees (dictated by the original verdict) and will also post a $66 million bond to secure the stay, according to Vonage. Over the past few weeks, several reports of prior art have surfaced, leading many in the VoIP world to question why Verizon was granted its patents, and their validity in such a dispute.
“We are confident this error will be rectified by the appeals court, which hears intellectual property cases exclusively,†said Sharon O’Leary, Vonage’s chief legal officer, in a statement. “As a result, we remain highly confident Vonage will prevail on appeal.â€
Internet phone service provider Vonage Holdings, which a federal court found had infringed on three patents owned by Verizon Communications, said its legal woes could lead to bankruptcy, according to a regulatory filing.
The filing Tuesday with the Securities and Exchange Commission also detailed other risks from continuing litigation. They include the possible interruption of service, an inability to repay its debt and a decline in its stock that could lead to the delisting from the New York Stock Exchange.
Vonage was ordered to pay $58 million and royalties on future sales to Verizon after it lost the patent infringement case in March.
The court also barred Vonage from adding new customers while it appealed the decision.
An appeals court allowed it to continue signing up new customers ahead of a hearing to consider a permanent stay on the bar on April 24 . continue reading…
After a jury sided with Verizon in its patent-infringement case against it, Vonage told customers and investors not to worry, because it was developing a workaround that would allow it to continue operating without infringing upon any of the patents in question. However, the company has now confirmed that there is no such workaround, and it’s not certain that one would be feasible, given the breadth of the Verizon patents. It’s filing for a permanent stay of the injunction against it, apparently with the hope that the appeals process will work out in its favor. If that move isn’t successful, it’s going to be awfully hard for the company to stay in business. Seeing the stay denied would be a dream scenario for Verizon, since the patents in question are so broad that it’s conceivable it could be impossible to run a landline-replacement VoIP service in the US without infringing upon them — meaning it could shut down the entire US VoIP industry and the stiff competition it provides the company’s traditional phone services. Verizon’s not the only company rubbing its hands gleefully, either. The whole VoIP space is so patented up that it’s under threat not just from entrenched rivals who would like to see its growth stymied, but by companies that have done little to bring their innovations to market and are looking to make a quick buck.
In a series of events meant to stir things up at a company that many analysts have already written of as dead, Vonage CEO Michael Snyder has resigned on the same day that the pioneering VoIP provider announced a series of cost-cutting maneuvers, including operations consolidation, a reduction in marketing, and predictably, layoffs. Formerly president of ADT, Snyder led the company since February of last year, when he replaced founder and current Chairman of the Board Jeffrey Citron in that role — the same man who will once again hold the CEO title while replacements are scouted. The shakeup seems to have buoyed investors confidence somewhat following the courtroom setbacks in that Verizon patent suit, with Vonage shares up as much as 13 cents in premarket trading; however, it’s a rather hollow victory when you consider that the ~$3.00 stock went for as much as $17.88 this time last year. So while it’s good to see Vonage making some proactive moves in the face of what can only be considered a deathwatch, there’s only so much the company can do to affect its own fate, and at this point we could only be a ruling or two away from the end.
Ruh roh, bad news for Vonage today. In one of the nearly ten million patent infringement suits that we’re closely following, a U.S. District judge has issued a permanent injunction against leading VoIP provider Vonage, barring the upstart telecom from using any technology protected by the three Verizon patents it has been convicted of infringing. In response to the ruling, company execs issued a statement attempting to reassure customers and reiterate its intent to appeal, although that didn’t stop panicked investors from pushing shares down 6.2% before trading was halted. Specifically, Vonage wants you to know that you “will not experience service interruptions or other changes as a result of this litigation,†claiming that it expects to prevail in an appeals process which starts in two weeks. If District Judge Claude Hilton decides at that time to make the injunction effective, Vonage can still plead its case in front of the Federal Court of Appeals — however, Hilton’s analysis of the injunction’s potential effects on both parties seems to squarely Verizon, which doesn’t bode well for Vonage even in a higher court. In other words, there’s no reason for Vonage users to start freaking out just yet, but if we were in your shoes, well, we might at least start window shopping for a new landline network.
This is totally on the concept tip, and as such may never actually be produced, but Vonage has been showing off a design here at CES for a nifty-looking wireless router/VoIP adapter with an integrated touch screen LCD for displaying caller ID info and assisting with initial network setup.
