Vonage loses appeal, now owes Verizon $117.5 million

A follow-up to our earlier story regarding Verizon's patent lawsuit against Vonage: the latter company has lost its appeal against the former, and is now looking at having to pay the full $117.5 million settlement, plus $2.5 million to charity. It's been a bad few days for Vonage indeed, with the company's shares dropping 87 percent since IPO, and a tenth of its workforce out of a job. When you've hit rock bottom, the only way is up, right?

[Via Slashdot]

[CUBSWILLWIN @ Nov 17th 2007 3:42PM]

Thats a big number...

[Mike @ Nov 17th 2007 4:01PM]

Only thing funnier than this is Maddox pwning Crocs and their stock dropping 40 points hahaha

[TURNERSVILLE @ Nov 17th 2007 4:20PM]

As soon as they are done paying out settlements they will be bought. Rock bottom is still a little bit away. The Stock will lose a lot more value so Vonage will be a value as long as customers abondon ship to....ummmm...crap!

[Z @ Nov 17th 2007 3:52PM]

The amounts listed in the title and body of the post don't match. $175.5 mil, or $117.5 mil?

Either way, sucks to be Vonage.

[ryan @ Nov 17th 2007 3:55PM]

I think the article says $117.5 million.

[kojo87 @ Nov 17th 2007 4:01PM]

yeah i dont get that either. which amount is it?

at least i wont have to watch anymore stupid Vonage commercials.

[Z @ Nov 17th 2007 4:42PM]

@ ryan

Yeah, well, it does now... now that it's been edited.

[Bobs @ Nov 17th 2007 9:46PM]

God yes, those annoying ass loud commercials with the yodeling.

[Justin @ Nov 17th 2007 4:04PM]

Up isn't the only way. Gone is an option, too.

[chrisaroz @ Nov 17th 2007 3:58PM]

I'm so glad I got rid of that crap. The quality was crap. The customer service was a crapful of lies. Nothing good about Vonage expect the price... but you get what you pay for - you guessed it: crap.

[Cupajo @ Nov 17th 2007 4:46PM]

While I agree that customer service was terrible (15 cents an hour doesn't buy you much, even in Bangladesh), I've never had any problem at all with the call quality of my Vonage line. Maybe you just have a shitty internet connection.
In any case, this is a real shame. Verizon can't innovate so they litigate.

[Loker @ Nov 17th 2007 5:13PM]

I have been using Vonage since it launched and the quality has been amazing....they even gave me a free wi-fi phone to use on top of my normal voice adapter...

customer service was lackluster in the beginning (longest hold times I have ever seen!) but they have been getting better in that respect...

What you have to realize is that Vonage or any other VoIP provider for that matter is that your internet connection can greatly affect call quality....so your bad call quality was more than likely the fault of your ISP and not Vonage...

[XiozTzu @ Nov 17th 2007 6:17PM]

@ Cupajo
"In any case, this is a real shame. Verizon can't innovate so they litigate."

What? They did innovate, that is why Verizon is getting paid the money, Vonage is the one who couldn't innovate.

So, Verizon innovates, Vonage steals, then Verizon litigates.

[Tiptup300 @ Nov 18th 2007 1:24PM]

My brother had Vonage for a while. Never could talk to each other over the phone, it felt like we were talking over dialup internet...wait a minute!?

[Macbeth @ Nov 17th 2007 11:57PM]

they still got bankruptcy

[Mayur @ Nov 17th 2007 4:30PM]

Ill be with vonage until the end.

[Ryan Trevisol @ Nov 17th 2007 11:45PM]

woo hoo, woo hoo hoo, woo hoo, woo hoo . . . who?

[Joseph @ Nov 17th 2007 4:31PM]

most probably they're gonna get bought dirt cheap!!!

[Eriq @ Nov 17th 2007 4:31PM]

There's always death

[jodamiller @ Nov 17th 2007 4:32PM]

I use Vonage and I've never had a problem with them. Maybe I'm lucky or those who aren't happy with them are always sure to comment negatively. Either way, I guess I'll keep using them unless they shut down.

[4honor @ Nov 17th 2007 4:36PM]

So... did Vonage just stole something from verizon and thought they could get away with it? Vonage should have just did something on their own... Wasn't Vonage sued by somebody else before too? What happened before this?

[Cupajo @ Nov 17th 2007 9:35PM]

Your grammar makes angels cry.

[ChillyWilly @ Nov 17th 2007 5:10PM]

So the big question after this news: does Verizon actually have a product or service that uses this patent they own or is this another RIM job being pulled here?

I don't fault someone for securing a patent on a technology, but it doesn't do anyone any good if they just own the patent and don't have it in an actively-used product or service.

So now that Verizon gets this money (assuming there's no change for Vonage to appeal again), what do they do with it? I think they should be forced to put it towards doing something with that patent.

Now, if they do have a product or service that's based on this patent, then everything I've said above is just me ranting.

[Ronald McD @ Nov 17th 2007 6:59PM]

Companies go out of their way to research and develop products/technologies, for the sole purpose of putting a patent on it. They have no intention of actually releasing it, they are simply removing the threat of a competitor doing so. A friend of mine does this for a living.

[ChillyWilly @ Nov 17th 2007 7:17PM]

So their whole intent is to spend money, time, R&D, capital, VC money, etc.... all for the purpose of inventing something and placing a patent on it that never gets used. Then they watch for some other company to "use" that technology, take them to court, get lots of money, and/or put the other guy out of business.

In the meantime, said technology never gets to stay around for consumers to actually use....

That's just sad.

Granted, I know some of these things stay around, but the whole intent and purpose to invent something sure has changed from even 40 years ago. It used to be to give the consumer something to use. Now it's a way to offset profit losses.

[Jkswiss @ Nov 25th 2007 5:34PM]

Hehe, you said rim job.

[viper79135 @ Nov 19th 2007 7:11PM]

chilly did you bother to look up to see if verizon offers VOIP?
look up Verizon voicewing
they are using this technology that vonage stole

[ChillyWilly @ Nov 17th 2007 8:55PM]

LOL

[Cupajo @ Nov 17th 2007 9:38PM]

ChillyWilly, it's very sad. They research it because it's a cheaper, better alternative to what they offer. They buried it so they could continue to overcharge for their inferior product. That's why I don't consider what they did to be "innovation". Actually, it's the exact opposite. It stifles progress.

[Javaflash @ Nov 17th 2007 5:18PM]

Tell lawyers not to leave the court yet, fax them a Chapter 11. Save a trip.

[master_sword @ Nov 17th 2007 5:24PM]

Woot! hopefully this means no more vonage commercials that get that ever-so-catchy tune stuck in my head!

[roflercopterer @ Nov 17th 2007 6:27PM]

Buy their stock. It'll get dirt cheap and then skype aka ebay will come along and snap it up and re-brand it as a skype service.

[digitallysick @ Nov 17th 2007 6:54PM]

file chapter 7 , eliminate all the dept, and remain a profitable company

[Kerry Ret @ Nov 17th 2007 7:32PM]

Don't count Vonage out... I hear they are releasing a slick 'Vonage World' marketing campaign using citypixel.com Virtual World Technology. Also, I am a hard core Vonage user for 3 years, never had a problem, likely they will get bought soon given the sharp decline of the stock price....

[Jim @ Nov 17th 2007 7:44PM]

This is classic corporate crap, a bunch of IT junkies figure out a way to get free phone calls over the internet. Big Verizon finds out and slaps a patent on it, but does absolutely nothing with it. Vonage comes along and creates an incredible profitable company off what Verizon thinks a bad idea but still a possible threat. Verizon waits for Vonage to get big and VOIP to become a household term and then sues. Now just wait, Verizon is going to make an offer to buy out Vonage, now that they are at their lowest.

[Maestro @ Nov 17th 2007 8:36PM]

I don't get all the "Verizon isn't going to do anything with this patent" bullcrap. Am I the only one who has heard of VoiceWing? That's Verizon's VOIP. So apparently they are doing something with it.

[What VoiceWing? @ Nov 18th 2007 1:13PM]

Apparently, no.

I haven't heard of VoiceWing, and I'm a Verizon landline customer. Not seen on my monthly bill or the glut of ads they include with it, never seen a commercial, nada.

And if I DID by chance see it and don't remember it, that shows how little a sh!t they give about folks adopting their VOIP service. As opposed to, say, their ongoing "Can you hear me now" wireless campaign, whose tagline is so memorable that it pops up in (ab)normal convo.

My 2c

[ChillyWilly @ Nov 18th 2007 1:50PM]

I'd never heard of VoiceWing either. Maybe they don't market it like Vonage does. Maybe if Verizon spent some of that legal fund to compete with Vonage and other VOIP providers, we wouldn't be seeing these settlements take place.

[Adrian Williams @ Nov 18th 2007 6:22PM]

I have and I don't live in Verizon land

[Tim Ficke @ Nov 17th 2007 8:40PM]

How are they not bankrupt yet?

[billy bob thorton @ Nov 17th 2007 9:33PM]

By reading the coments in here I'm assuming most have not read about the million dollar patents. The two in question 574 and 711 are very similar, well here you go...

#6,282,574 [Method, server and telecommunications system for name translation on a conditional basis and/or to a telephone number]
"An enhanced name translation server, for use on a packet data network such as the Internet, executes a conditional analysis in response to at least some queries or requests for name translations."

Since this was filed in 2000 it blows my mind they were awarded this patent. I remember talking about this stuff back in 1997 with other sophomores in highschool. Patents aren't supposed to award the guy who gets in line first with an idea everyone else wants to do, but to protect true innovation.

[Miraa @ Nov 17th 2007 10:12PM]

Not to worry Vonage shareholders! The stock can't go any lower than zero!

[epi117 @ Nov 17th 2007 10:50PM]

I have been using them for years, zero problems for 24 bucks i cant really complain, its a sweet deal.

once or twice a year i have to reboot device, thats about it

[Darren Tilley @ Nov 17th 2007 11:29PM]

I know it. I use Vonage, and I love it. For a low fixed fee, I not only get to call anyone in the States, but I can also call my family in the UK for no additional charge. Since they added International countries to their Unlimited plan, the service is a no brainer.

I don't get why everyone is so down on them. I can use my own regular phone set with their adapter, and it's practically configuration free.. And when I get a voicemail, I have it set so that I get the recording forwarded to my email, so I'm always on top of who's called.

I'd be extremely sad if Vonage dissapeared because of this. They seem to be the only VOIP company with the "idiot-proofing" in place to be a real contender to traditional phone lines.

[Christina Warren @ Nov 17th 2007 11:31PM]

I feel for Vonage customers and all - but against my better judgment, I'm actually with Verizon on this one. I read the court documents in April (I was really, really bored) and the patent filings and a bunch of other stuff, and it was pretty black and white - Vonage violated several of Verizon (which we should all remember was formed from Bell Atlantic's merger with other telecos, and Bell Atlantic was spun off from AT&T in the 80s...thus Verizon inherited one of the biggest telecom research/development/patent groups in the world, when they incorporated in 2000 and filed some of these patents - it wasn't like they didn't already have the research or even the pre-filings, they just weren't done under the Verizon moniker) patents both in voice/data calls and even in billing. The court said these violations were unintentional - that doesn't mean they get off the hook. This is why start-ups often fail - they don't do proper research before launching to make sure they aren't violating the intellectual property of others.

Plus, Vonage had a chance to settle - and they didn't - figuring that the gamble would pay off and Verizon would either blink (ha!) or lose. It was pretty black and white - they used technology that was already patented by a competitor. For not settling and not attempting to work out some sort of other agreement, Vonage sucks. However, it's their existing customers that already lose.

[frostymoon @ Nov 26th 2007 9:44PM]

chrisaroz - I totally disagree with you! I've also been a Vonage user for many years. No problems that were not related to my ISP. I currently have ATT DSL for $10 per month (700kbps) and the 500 minute Vonage plan (since I mostly use my cell phones). Even with my currently slow broad band, the calls work great!! I'm hoping this is not the end for that great service provider. Yeah, the commercials were a bit bad but some were funny! I'm also a Skype user, while their service is way cheaper ($15 per year for unlimited domestic calling is pretty sweet!)

[DudeAsInCool @ Nov 18th 2007 1:21AM]

Where was Verizon and ATT and Time Warner when Vonage introduced VOIP? The big boys just want their monopoly and the ability to stick it to consumers rather than offering them a decent product at a reasonable price--I hope they all go under.

[Gino @ Nov 18th 2007 1:36AM]

Bah in our country the bad monopoly goes by the name PLDT.

[alex @ Nov 18th 2007 1:45AM]

I'm not sure how it is in the rest of the english-speaking world, but in Canada where Vonage has a VOIP offering, they've been playing the same tired old advertisments for the better part of five years.

Every time I see the orange screen and hear that annoying cover of the Rock-A-Teens' "Woo hoo", my skin crawls and I say a silent prayer that harm should come to whoever is subjecting the good people of toronto to this sensory stimulus.

Ironically, had they bothered to read 'A Clockwork Orange' they would know that VON is the Nadsat word for 'stink' and Vonage is therefore akin to stench. Perhaps they should've chosen a different colour for their corporate image.

[tom @ Nov 18th 2007 2:05PM]

As a loyal early adopter of Vonage I have never had a lick of trouble, quality has been excellent and I have never had to call customer service so I can't comment on that. I want my Vonage to stay just the way it is, good quality and a cheap price. The telco was charging me triple for less and I won't go back, I'll go wireless first.