Vonage is facing Verizon in the U.S. District Court in - with Verizon claiming patent rights to key technology used by Vonage and possibly many others in the industry. Verizon is charging Vonage with violation of seven of its patents. The patents cover a broad swath of VoIP technology, including the completion of calls between VoIP users and the public network, authentication of VoIP callers, validating VoIP callers' accounts, monitoring VoIP usage, fraud protection, enhanced features, and the use of Wi-Fi.
At the same time reports have started spreading through the industry that Vonage is launching an annual pre-paid VoIP plan in a move some theorize is designed to generate some fast cash, and that the VoIP house is also about to become a mobile virtual network operator (MVNO).
Verizon filed its suit in June. In July 2006, Vonage said it had acquired three VoIP-related patents from Digital Packet Licensing that address compression techniques related to the public network, a move seen as an attempt to find technology work-arounds to the Verizon patents if they are upheld.
In the extreme, should Verizon win, then Vonage could theoretically be forced to shut down its VoIP service. Such an outcome, though, could typically take years of litigation, and few industry observers expect that to happen. The most likely outcome is thought to be a license payment from Vonage if it loses, or is losing, the case. Estimates are also that, if it knocks off Vonage, Verizon will then go out after as many other VoIP industry players as it can get its hands on.
Vonage is expected to become a mobile virtual network operator (MVNO).
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