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4/10/2007
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Trying To Stay In Business, Vonage Posts Royalty Payments And A $66 Million Bond

Vonage says it will keep operating as it appeals the court decision that said the company had violated patents held by Verizon.

Pressed against a wall by the loss of patent litigation with Verizon Communications, a feisty Vonage said Monday it will continue providing its VoIP service to existing customers and continue to sign up new customers by paying into escrow a quarterly royalty of 5.5% while the case is on appeal.

Vonage said it views Friday's Court of Appeals grant of a temporary stay allowing it to sign up new customers "as the first step toward resolving this matter in Vonage's favor. Vonage also continues to believe that this case is an attempt to do in the courtroom what Verizon could not succeed in doing in the marketplace -- which is to put Vonage out of business."

Last month, Vonage lost a patent infringement decision in a Virginia federal court. Then, last Friday, it appeared that Vonage would be halted from signing up new customers, but the company has since devised a way to keep operating as near normal as possible.

Vonage has said it is developing "workarounds" to the Verizon patents that have been cited in the ongoing litigation.

"Vonage will continue to provide digital telephone service to existing customers indefinitely by paying into escrow a quarterly royalty of 5.5% throughout the appeals process," Vonage said. It also is posting a $66 million bond as required by the court.

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