A Verizon Communications Inc. lawyer told a federal jury in Virginia last week that Vonage Holdings Corp. infringed five patents covering Internet telephone services and owes at least $197 million in damages.
“Vonage, using our patented technology, is able to lure customers away from our land-line service,” Verizon lawyer Daniel Webb told the jury in opening arguments of a two-week trial in Alexandria. “That’s what this case is all about.”
Verizon, the second-largest U.S. phone company, accused Vonage of using its inventions for functions including billing and fraud detection, for services such as call forwarding, and for the use of Wi-Fi handsets in an Internet-phone network.
Vonage, one of the earliest providers of telephone service over the Internet, said the claims and the patents are invalid.
“Verizon has lost millions of customers and they’ve lost them for a variety of reasons, not because of Vonage,” Roger E. Warin, Vonage’s lawyer, told the jury. “This case is about choice and competition, which should be decided in the marketplace, not the courtroom,” he said.
The patent-infringement suit is one of at least two against Holmdel, N.J.-based Vonage, the biggest independent Internet-telephone company.
The suit by New York-based Verizon and one by Sprint Nextel Corp. seek cash compensation and orders to stop Vonage from using the disputed technology.
“The likelihood is very low that this would ever really have a material adverse affect on Vonage’s business,” said Clayton Moran, an analyst at Stanford Group Co. in Boca Raton, Fla., who doesn’t own the shares. “The patents are hard to enforce.”
Vonage would most likely end up paying a licensing fee to continue to use the technology, rather than shut down service, if it loses the case, Moran said.
Vonage aggressively markets its services and targets Verizon customers, with more than a million switching to Vonage, according to Verizon’s lawsuit, filed in June.
Warin, Vonage’s lawyer, told the panel of four men and four women that Verizon is losing customers as more of them opt to use only mobile phones or services offered by cable-television providers. Verizon’s suit is part of “a plan to stifle competition” and “neutralize Vonage.” he said.
