Verizon Sues Vonage Over Patents

Verizon Communications Inc. has accused Internet phone carrier Vonage Holdings Corp. of violating patent rights that Verizon has on technology for making phone calls over the Internet, Vonage said Monday.

The lawsuit was filed in U.S. District Court in Richmond, Va., on behalf of subsidiaries Verizon Services Corp. of Arlington, Va., and Verizon Laboratories Inc. of Waltham, Mass.

Holmdel, N.J.-based Vonage contested the claim.

“Vonage believes that its services have been developed with its own proprietary technology and technology licensed from third parties and intends to vigorously defend the lawsuit,” the company said in a statement.

Vonage spokesman Mitchell Slepian declined to comment further.

Vonage’s stock price dropped 12%, the latest blow to shares that have lost about half their value since the company went public in late May.

Verizon alleged that Vonage was infringing at least seven of its patents regarding Internet phone service, a technology known as voice over Internet protocol.

The patents include inventions related to gateway interfaces between a packet-switched and circuit-switched network, billing and fraud detection, call services such as call forwarding and voicemail and methods related to Wi-Fi handset use in an Internet-calling network, the lawsuit said.

The complaint, filed June 12, also claimed that “Vonage is aggressively marketing and advertising services made with Verizon’s appropriated intellectual property.”

Vonage has added 1.1 million customers in 15 months, “many of whom are Verizon’s former customers,” the lawsuit said.

Vonage’s plan to use funds from its initial public offering to expand its marketing and advertising on services that allegedly infringe Verizon patents threatens “to shift more customer and goodwill to its business at Verizon’s expense,” the complaint stated.

The action by Verizon, the country’s largest telecommunications company by revenue, follows a shareholder class-action lawsuit that claims Vonage improperly steered consumers toward investing in its $531-million initial public offering.

Shares of Vonage tumbled $1.12 to $8.48, while Verizon fell 37 cents to $32.17.