VoIP service providers watch Verizon vs. Vonage

Saturday, April 14, 2007

Vonage is acting quickly to adjust after the recent Verizon victory in the lawsuit against the VoIP service provider. Verizon filed the lawsuit against Vonage accusing the Vonage of infringing seven Verizon patents regarding the VoIP technology.

The jury found that the claim was partially right as three Verizon patents on VoIP where infringed (not willfully). The judge ordered Vonage to pay $58 million and prevented the company from adding new customers. Later however another court temporarily lifted the Vonage penalty and scheduled the appeal hearing for April 24.

It is a small win for Vonage but it was not enough to save the CEO Michael Synder. He resigned and its place will be taken by the original founder of Vonage, Jeffrey Citron. The latter will have to face an uphill battle as Vonage prepares for the appeal that will be vital for the future of the company.

The Verizon lawsuit against Vonage can also be a turning point for the whole VoIP technology and VoIP service providers. Several analysts in the VoIP market think that should Verizon win again, the company could cite other VoIP service providers. The first VoIP service providers identified would be companies like 8x8 or SunRocket. Someone is also suggesting that the jury interpretation could convince Verizon to cite even Skype and the other Internet VoIP companies.

Also depending on the appeal outcome Verizon could also target its biggest competitors: the cable companies that are also becoming VoIP service providers. This step would be possible because the patent broad language could apply to the VoIP technology and some fear even to the Internet.