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Vonage Says Verizon Suit Won't Kill It

Light Reading
News Analysis
Light Reading
2/27/2007

Vonage Holdings Corp. (NYSE: VG) CEO Mike Snyder Monday released a statement saying that it isn't necessarily true that a patent fight with Verizon will spell the end of Vonage. (See Vonage Slams Verizon Lawsuit .)

Verizon filed suit against Vonage last June, claiming the VOIP provider has violated five patents covering technology that converts packet-based voice traffic to circuit-switched traffic. Verizon is seeking damages of more than $197 million, and demanding that Vonage stop using the traffic switching technology. The trial began last week. (See Vonage Faces Lawsuits.)

"It is wrong and irresponsible to presuppose either the outcome or the impact this litigation would have on our business," Snyder said. "First and foremost, we are confident we have not infringed on any of Verizon's patents and, in any case, we believe the Verizon patents are invalid."

Verizon didn't return calls for comment late Monday.

Snyder says even if Verizon prevails, Vonage will be able to take care of its customers. "We are confident that regardless of how this litigation is ultimately decided, Vonage's customers will see no change whatsoever to any aspect of their phone service."

Vonage says it will "vigorously fight" the suit, which it calls "frivolous" and "a transparent attempt to stifle one of its most successful competitors."

Vonage added more than 1 million net subscribers in 2006, but analysts and investors have been troubled by the company's slowing growth and rising customer acquisition costs. (See Analysts: Vonage Feeling Cable Heat.)

— Mark Sullivan, Reporter, Light Reading

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