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.
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].
Vonage stock has lost 90% of its value since Sept 2006.