Slight Bright Spot for Vonage: Partial Remand in Verizon Case

It may be extremely slim comfort for VoIP services provider Vonage in the wake of yesterday's total loss in the patent infringement suit brought against it by Sprint Nextel, but Vonage will take it nonetheless: A federal appeals court upheld today only two of the three patent infringement decisions in last March's case brought on by Verizon, remanding the third to a lower court for retrial.

This afternoon, Vonage accepted the good news like a team down six touchdowns in the fourth quarter that has just kicked a field goal from the 48. In a statement this afternoon, the company said it has already implemented a workaround for the other two patents, so service should not be affected. It did not refer to yesterday's statement, which said Vonage would plan to implement workarounds for the Sprint Nextel methodologies.

Vonage Chief Legal Officer Sharon O'Leary sounded all too gracious: "We thank the appellate court for its thoughtful consideration of the merits of our case. We are pleased with the decision to vacate the 880 patent and the damages. However, Vonage remains confident that it has not infringed on the 880 patent - a position we will continue to vigorously assert and look forward to presenting at trial." The remanded patent deals with the use of VoIP services in conjunction with handsets.


From here, the appeals court may have to re-assess the $58 million in damages Vonage owes in the Verizon case, perhaps cutting them by as much as one-third. Vonage's infringement was found to be not willful - a fact which works against Vonage, now that it wants those damages to be reduced.

Vonage also had been fined 5.5% of future revenue as royalties to Verizon, though with Vonage implementing a workaround that may not infringe on Verizon's claims, it's unclear whether Vonage will continue to owe those royalties - in effect, paying for technology it's not using.

Still, it was not damages that Verizon was seeking but a permanent injunction on Vonage's sale of its VoIP services. With two of the three patent rulings from the lower court upheld, that injunction may still be likely...unless the judge in the Sprint case imposes one first.

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