Vonage Has To Pay Up
Verizon wasn’t able to milk almost $200 million and 19 percent royalties from Vonage, but the troubled VoIP provider will have to fork over some cash for being in violation of three Verizon patents, a jury said yesterday.
Instead, the jury imposed a penalty of $58 million and a 5.5 percent royalty rate for the future, finding Vonage violated patents for connecting Internet calls to telecom-owned phone lines, for call waiting and voice mail, and for wireless connections.
Vonage said there should be no change from the consumer side of this, but Verizon has one more kill shot in its armory. Verizon is requesting an injunction to prevent Vonage from operating altogether.
If the company succeeds in that request, Verizon will get what it wanted more than money – the death of a competitor. Vonage, of course, will be appealing all decisions against them.
TechDirt’s Mike Masnick reminds those following the case of a recent Supreme Court decision regarding MercExchange and eBay, where automatic injunctions were found to be inappropriate, especially when a settlement is a reasonable option. In this case, a settlement would not only save Vonage from being closed down, but would save money in legal expense.
What will likely happen…"writes Masnick, "is that Vonage will just settle the case, because at some point it’s just cheaper to settle than to fight. Apparently, that’s what you get for innovating as a small company these days."