Verizon accuses Vonage of infringement

By JEFFREY GOLD,
AP Business Writer

Verizon Communications Inc. has charged that Internet phone carrier Vonage Holdings Corp. violated patent rights that Verizon has on technology for making phone calls over the Internet.

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-based Vonage, which said Monday it had been sued, 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 stock dropped more than 9 percent in trading Monday afternoon on the New York Stock Exchange, the latest blow to shares that have lost about half their value since the company went public in late May.

Verizon charged that Vonage is infringing on at least seven of its patents regarding Internet phone service, a technology known as voice over Internet protocol, or VoIP. 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 a VoIP 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 new 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 infringe on 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 91 cents, or 9.5 percent, to $8.69 and a 52-week low in afternoon trading on the NYSE. The stock has been trading in a 52-week range between $9.60 and $17.25. Verizon shares gained 9 cents to $32.63 in afternoon trading on the NYSE.

___

On the Net:

http://www.vonage.com

http://www22.verizon.com

http://news.yahoo.com/s/ap/20060619/...kxBHNlYwN0bQ--

Copyright © 2006 The Associated Press.