Tuesday, 24 April 2007

Vonage Continues Legal Fight to Sign up New Customers

Vonage has said that their loss in the legal battle with Verizon regarding patent infringement will render them bankrupt. The company has barely recovered from having to cough up USD 58 million to Verizon in a patent infringement lawsuit, that a federal judge has issued a permanent injunction against it now.

Founder Jeffrey Citron, who replaced Michael Snyder as chief executive officer last week, has decided to slash 10 per cent of the work force after first-quarter sales and customer additions missed analysts' estimates.

"The management team is incredibly focused on executing the plan, and focused very much on getting in place cost-cutting measures, the revamping of marketing and pushing ahead toward profitability,'' Citron said.

US District Judge Claude Hilton said, "I will sign the injunction at the time I rule on the stay".

Hilton agreed with Verizon that it would suffer irreparable harm if he allowed continued infringement of the Voice-over-IP (VoIP) technologies that allow consumers to make calls over the Internet.

"I don't think it's going to kill Vonage," said Albert Lin, an analyst at American Technology Research.

"It should likely continue as an independent company, but their operating challenges will have increased," said Stanford Group company analyst Clayton Moran.

"They could not have been commercially successful if they had not taken these patents we have and put them into their technologies," Verizon attorney Dan Webb said.

Webb also said that Vonage "can't live with an injunction because of the way their technology is designed."