Vonage shut down in 2 weeks?

Tom Keating : VoIP & Gadgets Blog
Randy Savicky
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Vonage shut down in 2 weeks?

Federal District Judge Claude Hilton has told Vonage to stop using Verizon patents, and has just two weeks to comply with the judge's order. As far as I can tell, without access to these patent rights, Vonage will be forced to shutdown. Vonage's stock tumbled after this news hitting just $3.00 ($-1.05) for a drop of -25.93%.

“They could not have been commercially successful if they had not taken these patents we have and put them into their technologies,” Dan Webb, an attorney for Verizon, said at Friday’s hearing on the injunction request.

So  what does this mean for Vonage's customers in 2 weeks? With the FCC getting in on the whole e911 emergency services thing awhile back, (as well as Congress) I wouldn't be surprised if the FCC has to step in to guarantee that Vonage is able to provide service for their customers regardless of the federal court's order. Can you imagine if Vonage is forced to shut down the phone lines for millions of customers? Imagine there is a 911-emergency for Vonage customers and they have no dialtone. Who's to blame? Vonage or Verizon for forcing Vonage offline? Who is liable? This doesn't bode well for Vonage, but Verizon isn't exactly smelling like a rose in all this. Congress, the FCC, or someone else in government will have to issue a stay on this order until customers can migrate to alternative solutions. Or perhaps Verizon is just using this as leverage to force Vonage to pay higher patent "extortion" fees to stay in business. Stay tuned...

Update: (15 min later)
I was just thinking about this some more and it occurred to me that Vonage must have contingency plans in place to work around the Verizon patents. Indeed according to Vonage's chief lawyer, Sharon O'Leary, she told Reuters outside court that "Vonage customers would not be affected by the case". However, she declined to comment on the sealed documents the company filed with the court. She added, "We will get the stay, either through the district court or the Federal Circuit Court of Appeals," O'Leary said.

So it is premature to say Vonage could be shutdown in 2 weeks, even though I have a "?" at the end of the blog title "questioning" whether Vonage could indeed be shut down in just 2 weeks. 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.


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