IP Democracy: It's Almost All Over for Vonage

(Back after a mini-spring break) It’s almost the end of the world as Vonage knew it — today U.S. District Court Judge Claude Hilton issued an injunction against the VoIP pioneer that bars the company from gaining any new subscribers, a compromise ruling that falls short of ordering Vonage to stop service altogether but one that nonetheless effectively dooms Vonage to death.

The judge’s decision follows a March jury verdict that found Vonage to be in violation of Verizon’s patents and ordered the competitive voice provider to pay the giant telco $58 million plus future royalties of 5.5% on revenue obtained through the use of the infringed patents. Judge Hilton took that verdict even further by issuing a permanent injunction barring Vonage from further use of the patent, a decision that could have shut off service to Vonage’s 2.2 million customers.

Vonage appealed that ruling and the decision today, while not effectively ending all Vonage operations, basically promises to kill the company slowly. Or as Vonage lawyer Roger Warin said “It’s the difference of cutting off oxygen as opposed to the bullet in the head.”

And he’s right. Vonage was already struggling to gain customers even before the jury’s decision and now it can absolutely gain no more customers. Its existing customer base will flee fast given this ruling and Vonage will be dead in a matter of months, if not weeks.

One tiny glimmer of hope: Vonage plans to appeal this latest decision and you never know what will happen. But the future doesn’t look bright for the one-time VoIP star.

Update: Vonage won late today a temporary stay of Judge Hilton’s injunction, meaning that until the appeals court hears Vonage’s appeal for a permanent stay, the company can continue adding new customers.

Posted by Cynthia Brumfield on April 6, 2007 11:44 AM to IP Democracy