VoIP company Vonage to pay Verizon $120 million in damages

November 17, 2007

VoIP company Vonage to pay Verizon $120 million in damages The Court of Appeals has turned down Vonage’s request for a new trial in the patent infringement case they’ve been fighting with Verizon.  With $120 million in damages to pay, what happens to the VoIP service provider?

Starting in the summer of 2006, Verizon filed a lawsuit against Vonage for infringing on five of their patents in regards to VoIP technology: the way calls are completed, how users are authenticated, using Wi-Fi phones for VoIP and more.  The trial ended on March 8, 2007, and Vonage was found guilty on three counts.

Vonage was ordered in April of this year to stop signing up new customers, but that was delayed, and later rescinded, so that they could continue business during the appeals process. 

Now that the company has been denied an appeal, Vonage owes Verizon $120 million dollars for their infringements.  According to Bloomberg, the Internet phone service now owes $253.5 million dollars in total, some of it due as early as December 2008.  Seeing as the company only generated $22.5 million in the quarter ending September 30th of this year, the company could be facing problems meeting these debts. 

With the company stock having lost 69% of it’s value this year, reducing their workforce by 10% already, and cutting their advertising budget, the only solution left to them will be looking to restructure their debt, which means bankruptcy. 

How this will effect their customers is not known at this time, but we will be keeping an eye out for it.

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