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Optical/IP

Vonage Sued Over Voicemail Patent

Vonage Holdings Corp. (NYSE: VG) learned Monday that it’s facing a second patent infringement lawsuit in less than a month, this time a $180 million complaint concerning voicemail technology. (See Klausner Sues Vonage.)

Klausner Technologies Inc., which holds some 25 technology patents worldwide, is bringing the suit. Klausner's attorney Greg Dovel describes his client as "primarily a holder of patents." The suit was filed in federal court in the Eastern District of Texas.

Vonage spokeswoman Brooke Schulz told Light Reading her company hadn’t yet been served with legal papers and had learned of the complaint only from the press release. “I know we have not received any heads up or query or contact from them,” Schulz said Monday.

The patent in question is for software that gives users a visual notification of new voicemails that can be retrieved by clicking a link.

Klausner Technologies founder Jonah Klausner says his firm offered to sell Vonage a license for the voicemail technology last January. Klausner attorneys say Vonage asked in February for more time to study the situation, but have not been back in touch since.

The new patent complaint is the second received by Vonage in less than a month. Verizon Communications Inc. (NYSE: VZ) last month brought suit against the VOIP pioneer for allegedly violating “at least seven” patents related to technology that converts VOIP calls from the Internet to the PSTN. Verizon filed its complaint June 12 in Federal District Court in the Eastern District of Virginia.

8x8 Inc. (Nasdaq: EGHT) spokeswoman Joan Citelli says most VOIP companies use third-party or “developed elsewhere” software components to handle many aspects of the VOIP service. 8x8, which is one of a handful of direct Vonage competitors, claims to have home-grown all of the technology in its Packet8 VOIP product. (See Vonage Peer Makes a Fine Whine .)

While Klausner has worked on the development of certain products, Dovel says, it isn't currently marketing any of them. According to Dovel, Klausner's only other lawsuit was last year's action against Time Warner Inc. (NYSE: TWX) division AOL over voicemail patent violations. Klausner says it has since sold AOL a license to use the technology.

Meanwhile, Vonage’s stock is, as ever, well below its IPO price. Vonage shares fell $0.27 (3.52 percent) to $7.40 in late afternoon trading on Monday. (See Vonage Falls Hard & Fast in Public Debut.)

Vonage has also been served with numerous suits by disgruntled investors since late May. The Vonage IPO is considered the worst Wall Street has seen so far this year. (See Regulators, Lawyers Swarm Vonage.)

Vonage also said Monday it has bought control of three patents from another patent holder, Digital Packet Licensing Inc., for technology that compresses VOIP audio. At the time of the sale, Digital Packet Licensing was suing Sprint and Verizon for infringing on those patents, so Vonage now becomes the plaintiff in those cases. That could provide Vonage lawyers with leverage to settle Verizon’s June 12 patent complaint.

— Mark Sullivan, Reporter, Light Reading

alchemy 12/5/2012 | 3:49:12 AM
re: Vonage Sued Over Voicemail Patent I can't wait for their quarterly report. They're down to around $7.25/share. They're losing money fast enough that Alcatel will likely start sniffing around.
Michael Harris 12/5/2012 | 3:49:08 AM
re: Vonage Sued Over Voicemail Patent Ha! Not even Citron is going to make lemonade from this lemon. The Vonage team drank far too much of their own KoolAid (pardon the second bad beverage pun). They could have sold this dog for a decent sum, as anything would have seemed a bargain after Skype. But no, they had to go for the IPO. Now, with the lawsuits piling on, who in their right mind would assume the liability through a Vonage acquisition? Hasta la vista, Vonage.
alchemy 12/5/2012 | 3:48:46 AM
re: Vonage Sued Over Voicemail Patent Michael Harris writes:
They could have sold this dog for a decent sum, as anything would have seemed a bargain after Skype. But no, they had to go for the IPO.

I disagree. The venture capitalists dumped, what, $700 million into this turkey? For a while it put New Joisey as #2 in startup money ahead of Boston. The company clearly isn't worth the liquidation preferences on that $700 million. The IPO sucker play was the only way out for the VCs and it was the only way the management team would ever make a dime. I'd guess Vonage is worth about $200/customer plus their cash from the IPO. They have 1.5 million customers. Do the math. Today's $6.50/share and $1 billion market cap is still overvalued.
twill009 12/5/2012 | 3:48:45 AM
re: Vonage Sued Over Voicemail Patent I had been thinking $3 per share was possible based on a 1x sales valuation, but "doing the math" on a subscriber basis would equate to about $1.50 per share excluding the IPO cash. I think you can exclude the cash since they are going to burn it up in no time flat.

Seriously, if you or anybody you know owns this thing and are hoping for a bounce, have them read the prospectus and reconsider. This is the new WebVan -- an interesting albeit flawed service with heavy competition and no plans to make money, ever.
DCITDave 12/5/2012 | 3:48:43 AM
re: Vonage Sued Over Voicemail Patent re: "This is the new WebVan... "

Thanks. Good post.

ph
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