Vonage: patent case could force bankruptcy

Vonage's SEC regulatory filing has warned of potential consequences of continued litigation

The ongoing patent-infringement battle between VoIP provider Vonage and US communications giant Verizon could result in Vonage facing bankruptcy, a filing to the US Securities and Exchange Commission yesterday warned.

The regulatory filing detailed other possible risks from the ongoing litigation that could materially affect the company's business, including a possible interruption of service which could affect results and impact on the continued viability of the company.

Vonage is currently seeking to overturn a federal court finding in March that it had infringed patents owned by Verizon, resulting in Vonage being ordered to pay Verizon $58 million (£29 million) in damages and royalties.

An injunction was granted to prevent Vonage marketing its services to new customers, although Vonage succeeded in getting a temporary stay on the injunction until the appeal court can hear Vonage's request for a permanent stay.

However, a workaround solution that will enable Vonage to provide services without infringing on Verizon's patents may not be possible in the short term, according to the reasons given in the request for a permanent stay.

According to reports on the Vonage appeal , Vonage claims the Verizon patents are so broad it may take months to develop a workaround solution "if even feasible", so an injunction could therefore impact its business permanently while Vonage works though the appeals process.

However, Vonage claims it is confident that it will succeed in getting a permanent stay and that it will ultimately overturn the patent decision.