WSJ: Vonage Loses Another Patent Case

Discussion in 'Current Events' started by RBMaraman, Sep 25, 2007.

  1. RBMaraman macrumors 65816

    RBMaraman

    Joined:
    Jul 25, 2002
    Location:
    Prospect, KY
    #1
    From The Wall Street Journal:

    Vonage Loses Another Patent Case
    By ROGER CHENG
    September 25, 2007 5:20 p.m.

    NEW YORK -- Vonage Holdings Corp.'s legal woes continue to mount after suffering a defeat at the hands of Sprint Nextel Corp.

    A jury in U.S. District Court in Kansas City, Kansas, ruled that Vonage had illegally used Sprint patents relating to connecting Internet phone calls. The jury ruled that Vonage would have to pay Sprint $69.5 million in damages, which was the equivalent of 5% of the revenue it derived during the period in which it used the technology.

    More importantly, Vonage runs the risk of an injunction barring it from offering its Internet-based phone service. Because Sprint manages Internet phone traffic as well, an injunction could happen quickly, said Mark Kesslen, the head of the intellectual property group at law firm Lowenstein Sandler PC.

    "Vonage is in trouble," he said, adding that an appeal would stay the injunction.

    Vonage, Holmdel, N.J., denies using Sprint's patents and said it would pursue an appeal of the ruling. "We are disappointed that the jury did not recognize that our technology differs from that of Sprint's patents," chief legal officer Sharon O'Leary said in a statement.

    Sprint was satisfied with the outcome. "We're extremely pleased with the verdict," said spokesman Matt Sullivan. "It underscores the strength of our voice-over packet portfolio and reinforces the importance of the innovations developed by Sprint employees."

    Vonage shares on Tuesday fell 34% to $1.30 -- an all-time closing low. The stock hit an intraday low of $1.20. After its initial public offering when the stock hit $17, the shares have steadily fallen over the past year and a half.

    It's the second major legal defeat for Vonage. In March, a federal jury had ruled Vonage had illegally used Verizon Communication Inc.'s patents, which dealt with routing Internet calls through traditional phone switches. The company was ordered to pay $66 million and pay a 5.5% royalty fee going forward. A decision on the appeal of the case is pending.

    Vonage is working on a technology "workaround" to Sprint's patents similar to how it is addressing the Verizon patents.

    A pioneer in offering Internet phone service, Vonage has suffered through a flood of negative press and litigation, which have curtailed customer growth. But even before the problems, the company lost money as it spent heavily on subscriber growth.

    In April, Vonage founder and chairman, Jeffrey Citron, took over as interim chief executive in an effort to streamline costs and run the business more efficiently in the face of rising legal costs.

    Vonage is not the only Internet phone company to get squeezed. Privately held SunRocket abruptly shut down in July. The start-ups faced intense competition from the cable companies, which offered their own Internet phone service bundled with Web access and cable TV.

    http://online.wsj.com/article/SB119075110072338982.html?mod=rss_whats_news_us_business

    Wow. This company really screwed up!
     
  2. Squonk macrumors 65816

    Squonk

    Joined:
    Mar 15, 2005
    #2
    Buh-by Vonage. No more "Woo-hoo, woo-hoo-hoo" for you!
     
  3. shoveland macrumors newbie

    Joined:
    Sep 6, 2005
    #3
    Wow. I thought they already were dead? Turns out I have the attention span of a raccoon.
     
  4. Squonk macrumors 65816

    Squonk

    Joined:
    Mar 15, 2005
    #4
    Yeah - they were in suspended animation per the lawsuit - they could not sign up any new users. And thusly all marketing was halted. I got a direct marketing piece in the mail about 3 weeks ago so I thought they were coming out of the woods. No such luck..,.
     
  5. danny_w macrumors 601

    Joined:
    Mar 8, 2005
    Location:
    Austin, TX
    #5
    Good riddance. I absolutely HATE their obnoxious "woo-hoo, woo-hoo-hoo" commercials. I would never buy anything from a company with ads like that.
     
  6. MacNut macrumors Core

    MacNut

    Joined:
    Jan 4, 2002
    Location:
    CT
    #6
    So because of the ad you would never buy the product, even if the product was good.
     
  7. danny_w macrumors 601

    Joined:
    Mar 8, 2005
    Location:
    Austin, TX
    #7
    Now you get the point. Bingo!
     
  8. yg17 macrumors G5

    yg17

    Joined:
    Aug 1, 2004
    Location:
    St. Louis, MO
    #8
    I don't use Vonage myself, but I support them. This is just an anti-competitive measure on Sprint's part. Vonage was gaining ground and they had to do something. We need more competition in the telecommunications industry, not less.
     
  9. xsedrinam macrumors 601

    xsedrinam

    Joined:
    Oct 21, 2004
    #9
    Vonage works great down here. I hope they make it through with a woo-hoo. Do any of you hold shares of stock with Sprint? Or maybe you're an employee? :p :D
     
  10. Squonk macrumors 65816

    Squonk

    Joined:
    Mar 15, 2005
    #10
    I was a Vonage customer for 1.5 years. Now I'm on Comcast's digital voice. The Comcast has been rock solid. I could not say that about Vonage. I had problems on a weekly basis with Vonage. But it was cheaper!
     
  11. Unspeaked macrumors 68020

    Unspeaked

    Joined:
    Dec 29, 2003
    Location:
    West Coast
    #11
    Isn't the Vonage theme actually from a Rancid song?
     
  12. danny_w macrumors 601

    Joined:
    Mar 8, 2005
    Location:
    Austin, TX
    #12
    It's from Kill Bill and performed by the 5,6,7,8s, but was originally done by the Richmond, Virginia based early rock group, Rock*a*Teens in 1959 (who knew?). And I can't stand that song!
     
  13. xsedrinam macrumors 601

    xsedrinam

    Joined:
    Oct 21, 2004
    #13
    You can't be distracted by the "woo-hoo" melody. It's all in the bass line. Classic. ;) :)
     
  14. Eric Piercey macrumors 6502

    Eric Piercey

    Joined:
    Nov 29, 2006
    Location:
    Perpetual Bondage
    #14
    I've had no problems with my Vonage service since I got it, a couple years ago.
     
  15. danny_w macrumors 601

    Joined:
    Mar 8, 2005
    Location:
    Austin, TX
    #15
    I know I'm slow, but can somebody please explain to me the reasoning behind a Vonage-type phone service? The way I see it it is only for people who have a cable internet connection, otherwise you will pay for a phone line and Vonage service. I have dsl, which runs on the same line as my phone, and I can't just cancel my phone line without also losing my dsl. So In my case I would end up paying the $15/mo for the phone line plus the Vonage charge of $30/mo, or the equivalent of a phone line and unlimited long distance with at&t. What am I missing?
     
  16. xsedrinam macrumors 601

    xsedrinam

    Joined:
    Oct 21, 2004
    #16
    Fair question imo. We live overseas (South America). For a fixed rate @$25/mo., we have unlimited long distance calling with a Stateside area code out or incoming. Our kids (both in U) can call on cells and talk "hasta los codos" at no extra charge. The reception is excellent, and there have been no surprises.

    We also have tried Skype. The P2P is okay, but SkypeOut was problematic with non-usable and/or busy phone lines.

    With Vonage, we have an assigned Stateside phone number and area code which works within the cable internet set up we have along with a router. Bottom line is that it's cost effective and efficient, at least for our needs.
     
  17. danny_w macrumors 601

    Joined:
    Mar 8, 2005
    Location:
    Austin, TX
    #17
    So you use cable internet, correct? So you don't have a "normal" phone line at all. Probably about the same total cost in the long run, since cable usually costs more than dsl, so it balances out ($45 phone + $25 dsl vs. $50 cable + $25 Vonage).
     
  18. yg17 macrumors G5

    yg17

    Joined:
    Aug 1, 2004
    Location:
    St. Louis, MO
    #18
    DSL can be had without a phone line (I should say phone service, since you still have a phone line), it's called naked DSL. Some telcos don't offer it, some are very reluctant to offer it, but it's possible.



    Also, even if you do have DSL and regular old phone service, Vonage has free domestic long distance and international long distance rates are a fraction of what the telcos charge. So if you call internationally a lot, it may still be worth it.
     
  19. xsedrinam macrumors 601

    xsedrinam

    Joined:
    Oct 21, 2004
    #19
    Yep, that's the whole enchilada. We have Cable, a home phone line, and Vonage on a separate line which functions in tandem with the Internet set up. We were looking at any where from US$50-120 additional on international calls alone, before we switched to Vonage.
     
  20. xsedrinam macrumors 601

    xsedrinam

    Joined:
    Oct 21, 2004
    #20
    Here, it's more like Cable US$112 +phone line US$15 + Vonage US$25. The difference comparing apples to apples is that the international phone calls with the phone line were hitting us with bills over US$150 a month. That wasn't "esmart". :)
     

Share This Page