Vonage reaffirmed its confidence in prevailing on appeal and in continuing to meet the needs and expectations of its over 2.2 million subscriber lines despite a ruling March 23 in Verizon's favor and a disproportionately-negative reaction from the market.
"To paraphrase Mark Twain, the rumors of Vonage's death have been greatly exaggerated," said Mike Snyder, Vonage's chief executive officer. "Friday's events represented one small step in what is sure to be a long legal battle.
"The fact is we've been preparing for this verdict and the possibility of an injunction for months," Snyder added. "For the market to react the way it did to the recent rulings shows an unfortunate lack of understanding of the judicial/appellate system, a lack of appreciation of Vonage's resourcefulness, or, perhaps, both. Anyone who's counting Vonage out is making a huge mistake."
If, as expected, the judge enters a permanent injunction against Vonage on April 6, 2007, but fails to grant the company's request to stay the injunction pending its appeal, Vonage will immediately file for a stay with the Court of Appeals for the Federal Circuit. In addition, the company reconfirmed its plan to file a notice of appeal to the Circuit Court of Appeals to set aside the jury verdict which was handed down on March 8, 2007.
"No matter what happens on April 6, the reality is this litigation is going to take years to make its way through the legal system," said Sharon O'Leary, Vonage's executive vice president and chief legal officer. "We are optimistic the trial court judge will stay the injunction. If he doesn't, however, we're very confident the Circuit Court of Appeals will stay the injunction through the entire appeal process.
"And once the case is up on appeal, we are confident that the appellate court will overturn the verdict based on the faulty claim construction of the patents involved." The Circuit Court of Appeals, which will hear the case shortly, has reversed prior verdicts involving flawed claim constructions approximately 40 percent of the time, noted O'Leary. Verizon's overly broad construction of the patent claims was adopted across the board which is unprecedented, given the large number of claim terms.
Vonage's accomplishments continue to validate its business model and strategy. The company has achieved 19 consecutive quarters of double digit revenue growth, doubled revenues to $607 million in 2006 alone, and added nearly 1 million net subscribers last year.
"We're continuing to innovate and provide reliable, affordable phone service to millions of customer lines. And that isn't going to change," Snyder added.