Vonage wins right to sign up more users

Embattled internet telephony player, Vonage, bought itself some more time on Tuesday, when an appeals court granted a permanent stay on an injunction that would have barred it from signing up new customers.

Late Tuesday, the US Court of Appeals for the Federal Circuit in Washington D.C. issued Vonage a permanent stay, overturning a previous decision by the US District Court in Alexandria, enjoining the company from using certain VoIP technology to add new customers.

The move means Vonage can continue signing up new subscribers as it continues to fight the patent litigation brought by US operator Verizon.

Vonage and Verizon have been involved in a bitter patent dispute and the VoIP operator has been found guilty of infringing three broad reaching VoIP patents owned by Verizon.

Vonage has admitted that it has no workaround for the technology and ultimately faces being shut down.

“It’s business as usual for us,” said Jeffrey Citron, Vonage chairman and interim chief executive officer. “We continue to believe we have not infringed on any of Verizon’s technology and remain optimistic that we will ultimately prevail in this litigation.”

Vonage will continue to serve existing customers by paying into escrow a quarterly royalty of 5.5 per cent throughout the appeals process and by posting a $66m bond as required by the court.

The company has to pay these fees to secure the stay as it continues to pursue its legal appeal.

Voange argues that the patents in this case were defined in an overly broad and legally unprecedented way.

Sharon O’Leary, Vonage’s executive vice president, chief legal officer and secretary, said, “We believe the district court’s decisions repeatedly neglected well-established law on claim construction and, as a result, artificially expanded the coverage of Verizon’s patents well beyond what was intended by the patent trademark process.”

Recently, it also came to light that prior art may exist on the patents Verizon is claiming as its own.

Daniel Berninger, a senior analyst with Tier1 Research, discovered that the claims in two of Verizon’s patents were anticipated by open standards assembled by the VoIP Forum in 1996 with the participation of Cisco, Microsoft, IBM, Nortel, Intel, Motorola, Lucent, and Vocaltec Communications, among others.

Unfortunately for Vonage, even if the validity of the patents was reviewed by the US Patent and Trademark Office (USPTO), the process would take time, likely more time than Vonage has on its hands right now.