Vonage Asks Court to Vacate Infringement Verdict

UPDATED: Vonage late on Tuesday asked the U.S. Court of Appeals for the Federal Circuit to vacate a lower court decision that the Internet telephone company infringed on patents held by Verizon.

If the court agrees, the case would go back to the lower court for a new trial based on a new “obviousness” standard set by the Supreme Court in its KSR v. Teleflex decision yesterday. In that case, the justices ruled an invention doesn’t qualify for a patent if it is obvious to those with knowledge of the skills involved.

A Verizon  spokesman said the company would file a motion with the appeals court Wednesday to reject Vonage’s motion.

Jeffrey Citron, Vonage  chairman and interim CEO, said the Supreme Court’s decision should have positive implications for the company in its pending patent litigation with Verizon. “We are very encouraged by the Supreme Court’s decision and the giant step it represents towards achieving much-needed patent reform in this country,” he added in a statement.

John Thorne, Verizon’s senior vice president and deputy general counsel, said in an e-mail statement to internetnews.com, “There is no merit to Vonage’s motion. It’s a delaying tactic to avoid final resolution of the appeal.”

Vonage has complained the lower court decision was based on a very narrow interpretation of the obviousness of Verizon’s patents.

In March, a Virginia jury awarded Verizon $58 million in damages for patent infringement by Vonage, which Vonage steadfastly insists it will win on appeal. In order to protect Verizon’s interest during the appeals process, the court ordered Vonage to post a $66 million bond and pay Verizon a 5.5 percent royalty rate for using Verizon technology while the case is on appeal.

“[The Supreme Court] rejected the rigid approach the Federal Circuit adopted in determining whether a patent is invalid as obvious,” Vonage wrote in its motion. “Because the standard for determining obviousness contained in the district court’s jury instructions was rejected [by the Supreme Court], the jury’s finding of validity must be set aside.”

Verizon filed suit against Vonage in June 2006, claiming several instances of infringement, including inventions relating to, “gateway interfaces between packet-switched and circuit-switched network, which is critical to implementing commercially viable VoIP telephony.”

Other patents named in the suit include solutions for fraud detection, services such as call forwarding and voicemail, and methods relating to the use of wireless handsets over a VoIP network. The jury ultimately decided Vonage infringed on three of the five patents cited by Verizon.

After the jury verdict, U.S. District Judge Claude Hilton ordered an injunction prohibiting Vonage from soliciting new customers while the company appealed the decision. Vonage successfully appealed to the U.S. Court of Appeals to permanently stay the injunction.

(This story is updated to reflect comments in Vonage’s motion to remand the lower court decision.)

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