Continued Patent Trouble for Vonage

Verizon v. Vonage (Fed. Cir. 2007)

Judge Dyk wrote the majority opinion. Each of the five substantive sections of the opinion garnered two votes. Chief Judge Michel joined Parts I and V while Judge Gajarsa joined Parts II-IV. Both Judges Michel and Gajarsa filed additional dissenting opinions.

Earlier in 2007, Vonage was found to infringe three of Verizon’s IP Telephony patents. The verdict awarded $58M in damages along with an ongoing 5.5% royalty rate and an injunction against further infringement.

On appeal, the CAFC affirmed that two of the patents were valid and infringed and that an injunction had been properly granted. As to the third patent (the ‘880 patent), the CAFC vacated and remanded after finding claim construction errors, potential errors in application of the obviousness doctrine under KSR, and errors in determining injunctive relief under eBay. The damage award was also vacated because the jury verdict did not apportion damages according to the various patents.

Thus, Vonage still infringes, but perhaps not as severely. It is unclear at this point whether avoiding infringement of one patent helps Vonage in any substantive way…

Chief Judge Michel would have affirmed across the board. And, interestingly, he would not have disturbed the $58M damage award even though one of the three patents was not infringed.

“When, as here, the evidence shows that each of the accused products infringes all of the patents-in-suit, and the infringer fails to make any showing on appeal that the damages award would not be supported by only those patents for which we affirm liability, we must affirm the damages despite our reversal of part of the infringer's liability.”

Judge Gajarsa found claim construction errors in one other Verizon patent, but could not convince a colleague.

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Sprint v. Vonage (E.D.Kan. 2007) On September 25, a Kansas City jury found that Vonage also infringes a patent held by Sprint Nextel — tacking on another 5% in royalty revenue. [LINK].

Notes:

• Vonage stock has lost 90% of its value since Sept 2006.
• Stay Pending Appeal I
• Stay Pending Appeal II
• Stay Pending Appeal III

Comments

[Andrew Dhuey]

As I said in the thread after oral argument, the media misinterpreted Judge Dyk's questions about a middle ground on the injunction issue. Many saw that as an indication that Vonage would be allowed continue infringing while paying a steep royalty. In fact, it really showed Judge Dyk's skepticism of Vonage's positions on infringement.

RIP, Vonage.

[Tom]

I'm a little surprised at the speed with which this patent suit seems to coming to a head. My impression is that the suit was first put in court just a bit over a year ago, but we're close to a stage at which an actual injunction might be put in place.

Is this a common sort of speed in a suit of this nature? I had always imagined that such a result would take a good number of years.

[TJ]

The E.D. Va. is known for being a "rocket docket" and can get its cases out within 1 year. After the E.D. Va. refused to fully stay its injunction pending appeal, Vonage sought expedited consideration at the Fed. Cir. The speed with which this case was decided--from complaint to CAFC opinion--is unusual, but not shockingly so.