Update

That didn't take long. After less than a day of deliberations, a federal jury found Vonage guilty of infringing on three of seven VoIP-related patents held by Verizon. The jury hearing the case awarded Verizon $58 million in damages and said that the VoIP provider must pay royalties of 5.5 percent to Verizon if it wishes to continue using Verizon's IP.

In a statement, Vonage noticed that the jury only found that it had infringed on three of the seven patents in question, with two of them related to billing. The jury also ruled that Vonage did not willfully infringe Verizon's patents, which likely reduced the damages award from the $197 million figure Verizon was seeking.

Vonage plans to appeal the verdict and is attempting to reassure customers that there will be no interruption in services, saying that should Verizon's request for an injunction against Vonage be granted, it will be immediately appealed. A hearing on Verizon's request for an injunction will take place on March 23.

In a statement, Verizon said that "We are proud of our inventors and pleased the jury stood up for the legal protections they deserve."

The verdict will send jolts through the VoIP industry, and other VoIP providers may now be feeling nervous at the prospect that they, too, will be targeted by Verizon. With over 2.2 million subscribers, Vonage is currently the largest VoIP provider in the US.

Original story

During closing arguments in its patent infringement case against Vonage, Verizon attorneys asked the jury to award the telecom $197 million in damages along with royalties of $4.93 per customer, per month. Accusing the United States' largest VoIP provider of building its business on Verizon's patent portfolio, Verizon lawyer Dan Webb told the jury that "This company has done very well with our patents and our technology for a number of years," according to Reuters.

Verizon's case hinges on seven patents awarded some time ago, covering voice mail, call forwarding, and WiFi calls. The seven patents turned into 48 patent infringement claims—all of which Verizon was allowed to raise during the trial.

In its defense, Vonage raised questions about the validity of Verizon's patents and argued that the VoIP provider did not infringe at all. During his closing arguments, Vonage lawyer Roger Warin said that the technologies covered in Verizon's patents were actually the invention of another VoIP provider, Net2Phone, and predated Verizon's patent applications.

Warin also accused Verizon of using the lawsuit to kill off a major competitor in an area where the telecom is losing customers.

Verizon has seen its landline customer base shrinking as consumers drop landlines in favor of cellular and VoIP. The telecom offers its own VoIP service, but it is not as well-known as Vonage and is significantly more expensive. Vonage got a head start in the VoIP game and the infringement case represents an attack by a larger latecomer to the market wielding a hefty patent portfolio.

Should the case end in a victory for Verizon, Vonage could be on the hook for hundreds of millions of dollars in damages and royalties. It could also result in an injunction against Vonage using the patents, which could have serious implications for its VoIP services and customers. A Verizon victory would also spell trouble for other players in the VoIP industry.

Vonage has said that its operations would be unaffected by a Verizon triumph, but given the company's history of hemorrhaging money, absorbing a sizable judgment and paying royalties of almost $5 per customer, per month may prove very difficult.