Vonage clarifies purpose of deal with VoIP Inc.

Net phone service says contract with network wholesaler not a work-around to help Vonage avoid using Verizon's patented tech.

Internet telephone provider Vonage on Thursday set out to clear up confusion about a contract it struck with network wholesaler VoIP Inc., emphasizing that the deal has nothing to do with developing a work-around to help Vonage avoid using patents held by Verizon Communications.

The deal, mentioned in an 8-K form filed by VoIP Inc. with the Securities and Exchange Commission on March 28, is a standard network termination deal, said Brooke Schultz, a spokeswoman for Vonage. The contract had spurred some bloggers and experts in the industry to speculate that Vonage was working with VoIP to come up with a work-around for patents held by Verizon.

Schultz explained that Vonage is using the VoiceOne network, which is owned by VoIP Inc., to transport voice over Internet Protocol calls.

"VoIP Inc. is not providing technology to Vonage," Schultz said. "We're simply dumping minutes onto their network. It's no different than any other carrier partnerships that Vonage has with companies such as Level 3 or XO Communications. We've had dozens of these partnerships for years."

In March, a jury found that Vonage's IP telephony service had infringed on three patents owned by Verizon. While the jury found that Vonage did not willfully infringe on Verizon's patents, it did award Verizon $58 million in damages. On March 23, U.S. District Judge Claude Hilton said he would issue an injunction barring Vonage from using the technology included in the three patents. But he said he would not issue the injunction until friday.

Now Vonage and its 2 million-plus subscribers are waiting to see if the judge will grant a stay at the same time he issues the injunction to give Vonage more time to either appeal the case, work out a deal with Verizon, or come up with a work-around.

Vonage maintains that it is not infringing on any of Verizon's patents. The company has said repeatedly since the verdict was announced that it plans to file an appeal. And since the judge announced he would issue an injunction against Vonage, the company has filed motions with the court for a new trial and for an alteration or amendment of the judgment. In response, Verizon has also filed documents opposing each of Vonage's motions.

As for the fate of its service, Vonage is adamant that its customers have nothing to fear.

"We are focused on getting a stay from Judge Hilton or from the appellate court," Schultz said. "And we believe we will continue to provide telephone service, just as we've stated in several press releases."

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