Vonage to pay Verizon $58M
p2pnet.net news:- Vonage has been ordered to pay Verizon Communications $58 million for infringing on three of the company’s patents and, “The monetary damages and the ongoing royalties could have a significant impact on Vonage, which has never turned a profit,” says CNET News.
But, says the story, the biggest risk for Vonage is that the company could also be forced to shut down its service.
Verizon also wants an injunction, “until an acceptable licensing agreement can be worked out” but, Vonage said in a press release, “If the trial court does impose an injunction, we will seek an immediate stay from the Federal Court of Appeals,”ays CNET. “Vonage’s customers should see no change to any aspect of their phone service.”
Nonetheless, “The threat of an injunction and a long legal battle could adversely impact the company’s sales, as new customers may be reluctant to sign up for a service that could be shut down,” says CNET, going on:
“In 2002, a jury found that RIM had infringed on patents held by the patent holding company NTP. A judge then imposed an injunction, which was stayed pending RIM’s appeals. The situation came to a head some three and a half years later when the judge in the case was about to impose the injunction. In the eleventh hour, RIM and NTP settled the case. But the ongoing threat of a shutdown spooked potential customers, causing RIM’s sales to dip during the quarter preceding the settlement, RIM said after the case was settled.”
Despite its losses, Vonage has a strong cash position, says the story, adding, ” The company ended the quarter with almost $500 million in cash, which means that the $58 million in cash damages it was ordered to pay to Verizon accounts for only about 12 percent of its total cash. But still financial analysts say it’s a serious enough blow to set the company back.”
Also See:
The New York Times – How to Bottle a Generation, March 8, 2007
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