Jury Orders Vonage to Pay $58 Million to Verizon in Patent Case

ALEXANDRIA, Va. – Internet phone company Vonage (VG) must pay Verizon Communications (VZ) $58 million for infringing on three patents that enable the upstart's low-cost telephone service, a jury ruled Thursday.

The judgment is far less than the $197 million that Verizon had requested, and it was more in line with what Vonage had suggested — if the Holmdel, N.J.-based company was found liable.

Still undetermined is whether Vonage will be barred from using Verizon's technology. Following the verdict, attorneys for New York-based Verizon requested a permanent injunction barring Vonage from further use of the patented technology.

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A hearing on the request was scheduled for March 23 in U.S. District Court in Alexandria.

Verizon sued Vonage last year for infringing on five patents that it said Vonage uses to make its Internet telephone service network functional. The eight-person jury found Vonage infringed on three of the five patents.

The jury found in its verdict that Vonage's infringement was not willful. That means Verizon cannot collect triple damages, which can be awarded in patent infringement cases.

"This is a significant victory for Verizon," said Dan Webb, one of Verizon's attorneys. "It shows that companies that infringe patents can be held liable."

In a statement, Vonage said it was pleased that the jury had rejected Verizon's claims that it infringed on two patents, and that it expected the verdict on the other three to be reversed on appeal.

Vonage added that it didn't believe there was any basis to support Verizon's request for an injunction. "If the trial court does impose an injunction, we will seek an immediate stay from the Federal Court of Appeals," it said.

Vonage is a leading provider of broadband Voice over Internet Protocol service and has a customer base of more than 2 million. Last year, it lost $286 million on revenue of $607 million.

Verizon Communications Inc. earned $6.20 billion in 2006 on revenue of $88.14 billion.

Shares of Vonage Holdings Corp. fell 21 cents, or more than 4 percent, to close at $4.84 on the New York Stock Exchange. Verizon stock gained 80 cents, or 2.2 percent, to close at $36.48 on the same exchange.