Vonage Patent Update

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Tom Keating
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Vonage Patent Update

As I predicted, Vonage was issued a stay in the Federal Court of Appeals and would not be shut down as a result of their litigation with Verizon. Vonage today stated that it views the Court of Appeals' granting of a temporary stay on Friday as the first step in resolving the matter in Vonage's favor. The temporary stay allows Vonage to continue to add customers and will will remain effective while the Appellate Court considers making the stay permanent. As I also predicted, "I think Vonage will most likely get a stay in the Federal Circuit Court of Appeals, but may have to incur daily penalties (issued by the court) for patent violations should they eventually exhaust all their legal options." It would appear this is the case, since Vonage was ordered to escrow a quarterly royalty of 5.5% and post a bond of $66 million to secure Verizon's damages.

According to Vonage's statement, "Vonage will continue to provide digital telephone service to existing customers indefinitely by paying into escrow a quarterly royalty of 5.5% throughout the appeals process. Separately, the District Court required Vonage to post a bond of $66 million to secure Verizon's damages judgment. Vonage is pleased that existing customers will not experience any interruption in service. The Company continues to believe it will succeed on appeal and continues to work on designing around the Verizon patents."

As if to stoke the flames with Verizon, Vonage stated "Vonage also continues to believe that this case is an attempt to do in the court room what Verizon could not succeed in doing in the marketplace -- which is to put Vonage out of business."

And for worried Vonage stockholders, Vonage announced a timely investor update conference call taking place this Thursday, April 12, 2007 at 8:00 AM ET. To participate, dial (800) 289-0533 approximately ten minutes prior to the call. International callers should dial (913) 981-5525. The call will be simultaneously webcast and accessible via Vonage's Investor Relations website at http://ir.vonage.com.

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