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Report: Vonage Cannot Work Around Verizon's Patents
[April 16, 2007]

Report: Vonage Cannot Work Around Verizon's Patents

TMCnet Web Editor
The bad news surrounding Vonage (News - Alert) continues to snowball, with the latest being that the embattled VoIP service provider has no way to work around Verizon’s (News - Alert) patents, according to a published report on USA Today’s online site.

The admission puts yet another nail in the coffin for Vonage, which several weeks ago filed for a temporary stay while reportedly claiming that it was developing a workaround surrounding Verizon’s VoIP technology patents. Vonage doesn’t even think a workaround is feasible given the scope of Verizon’s patents, which define the methods used to route calls between the Web and phone networks.
Over a month ago, a Federal court ruled ordered Vonage to pay $58 million to Verizon for infringing three VoIP-related technology patents. Several weeks later, a Federal court ruled Vonage could no longer use Verizon’s patents. Over a week ago, a Federal court ruled Vonage could no longer sign up new customers, but the company was granted an emergency stay.
Last week, Vonage replaced CEOs, with Jeff Citron replacing Michael Schneider. The company is looking for a permanent CEO.
Although Vonage has put up a bold front continually reassuring customers it is in for the long haul, the management change and now the claim it cannot circumvent Verizon’s patents is a definite sign the VoIP company is now spinning
According to the USA report, Vonage was quoted as saying Friday that it "currently has no workarounds that moot the need for a stay." The company was further quoted as stating “While Vonage has studied methods for designing around the patents, removal of the allegedly infringing technology, if even feasible, could take many months to fully study and implement."
Vonage’s survival now appears to hinge on how quickly it can stem the loss of customers and shareholder confidence. The company has reportedly seen its stock price plummet by over 45%.
The once-brash company no longer has an air of confidence, as Vonage reportedly admitted Friday that even if it implements a workaround and wins the appeal of its case, Vonage might not be able to make up for the revenue from lost customers and restore goodwill among customers and shareholders.
Vonage has stated it loses about 2.5% of its customers a month, or about 650,000 a year.
Spencer Chin is a contributing editor for TMCnet. To see more of his articles, please visit his columnist page.
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