Vonage avoided the death blow of having their service shut down by an injunction, but they have been ordered to pay Verizon $58 million plus 5.5% of all future subscription royalties after losing a patent case. I would say this was a win for Vonage, but it is a compromise that Verizon suggested. And why wouldn’t they? With Verizon receiving 5.5% of future royalties and Vonage’s ability to poach subscribers halted for now, they have gotten the immediate relief they wanted.
While I still feel the patent system is strangling innovation, I can’t speak to the merits of this particular case since I do not know the details. I do know that unless the patent system is changed we will have more and more lawsuits seeking to kill the competition for what may at times be bogus patents. I think the need for innovation needs to be taken into account when patents are examined, even beyond the ridiculously vague ones that have been granted to companies that have never produced a product or business model based on their idea. Being a patent troll is killing the entrepreneurial spirit.
Update: A federal appeals court has temporarily allowed Vonage to continue operations as normal while they decide whether or not to accept the lower courts ruling. Either way, a customer exodus from Vonage is likely.
