Digital Trends

An appeals court has upheld a verdict that Vonage infringed on two Verizon patents, adding to the VoIP provider's legal woes.

The legal eagles at VoIP operator Vonage may frantically be trying to push the "reset" button on this week. First, a jury in Kansas City finds the company is violating patents owned by Sprint and must may the company $69.5 million plus 5 percent of future revenues. Next, a federal appeals court upheld a jury verdict and injunction against Vonage for infringing on two patents owned by telecom operator Verizon.

The ruling stems from the long-running patent battle between Verizon and Vonage, in which Verizon was granted $58 million in damages and a 5.5 percent royalty on future Vonage revenue. Vonage is, of course, appealing the case, and managed to get a stay on an injunction barring the company from using Verizon patents and signing up new customers in the meantime—so the company was able to continue conducting business. Now, a federal appeals court has partially upheld the verdict against Vonage, confirming the finding that Vonage infringed on two Verizon patents. However, the judge did find the district court erred in its jury instructions for the third Verizon patent in question, and has sent that patent back to the lower court for a new trial. Because the original ruling did not specify what portion of the damaged awarded to Verizon were associated with which patent, the court also remanded the damages and royalty awards back to the lower court.

Vonage wasted little time spinning the ruling as a partial victory: "We are pleased with the decision to vacate the 880 patent and the damages. However, Vonage remains confident that it has not infringed on the 880 patent—a position we will continue to vigorously assert and look forward to presenting at trial," said Vonage's Chief Legal Officer, Sharon O'Leary, in a statement. "We have had our workarounds for the 711 and 574 patents in place for some time and will remain focused on providing a great customer experience."

While the injunction against Vonage which would prevent it from using technology in the 711 and 574 patents is still stayed, unless Vonage obtains an emergency stay from the Supreme Court, the injunction will go into effect within a month, according to industry watchers. Vonage may not care: if nothing else, the legal battle has given it time to deploy workaround for the patents in question and avoid a service shutdown.