Vonage can't find workaround for Verizon's VoIP patents

Internet telephony company Vonage has said that it does not have the technology to carry on its business without infringing telecoms giant Verizon's patents. It had previously said that it could operate a workaround solution, but now admits it has none.

A court ruled earlier this year that Vonage was infringing some Verizon patents relating to its Voice over Internet Protocol (VoIP) systems. It has said that its business would be able to carry on and that it could find technical alternatives to the infringing technology. But in a court filing just published on the orders of the Court of Appeals for the Federal District Court for the Eastern District of Virginia, Vonage admits that it has no technical fix.

"While Vonage has been considering design around options, it does not have a design that can be implemented immediately, if such a design around is even feasible," said the filing. "In fact, current design around options contemplated could take many months."

In addition to the general ruling on patents, Verizon was granted an injunction stopping Vonage using its technology for new customers pending Vonage's appeal of the case.

Vonage appealed against that injunction, saying that the rate of customer change in its industry is so fast that a ban on new customers would be fatal for the firm. It was given an extra two weeks to convince the court of its case.

The revelation that there is no workaround came in documents filed with the court as part of that process, in which it requests that the injunction be lifted until the full appeal has been heard. The court ordered the release of some of the filed documents.

The documents, which argue against a permanent injunction on the use of the patented technology, contain predictions of the consequences an injunction would have, though with some words blanked out in the publicly released versions.

"Even if Vonage was somehow able to implement a design around, and was able to ultimately prevail on appeal, it would have no hope of regaining its lost customers, or its lost goodwill, and its loss of revenue would be permanent and [blank]," said the documents. "The injunction would [blank] Vonage before it even has the opportunity to challenge the injunction and underlying trial on appeal."

Vonage floated on the stock market last year but has had a turbulent time, with its shares falling in value from $17 at float to around $3 now. Its chief executive, Michael Snyder, left the company last week and founder Jeffrey Citron took over.

In the original ruling in March, Vonage was ordered to pay $58 million in damages for patent violation. The patents involved in the case relate to the connection between Vonage's network and the standard telephone network. Patents relating to billing systems were ruled not to have been violated.