Life has served Vonage some lemons recently, but the last 48 hours have been good to it. It won a permanent stay on an injunction that could have forced it into bankruptcy, and it sought to turn its recent bad publicity into a force for good.
The VoIP company launched FreeToCompete.com, an attempt to stir up grassroots support among customers for its patent fight with rival carrier Verizon. Hours earlier, it was awarded the permanent stay to the injunction that would have prevented it signing up new customers and threatened its very business.
If you patent an orange, does that mean you own a patent on the orange tree, too? the FreeToCompete site asks. What about the ground where the tree grows? Or the truck that takes the orange to the market?
Vonage was found to infringe three Verizon patents. Two of the patents cover network address translation, a technology that Vonage is comparing to an orange hanging on the VoIP tree – it’s a part of the system, but it’s not the whole thing.
The company claims Verizon’s patents were construed over-broadly by the Markman hearing District Court judge, so the jury had little choice but to find Vonage guilty of patent infringement.
The patents cover ways for an internet domain name lookup to be routed to a selected endpoint device depending on either the time or on the device’s internet connectivity or lack thereof. A third patent covers wireless access technology.
Vonage admitted recently that it had no workaround for the patents, but that it had some ideas in the design phase.
Now that the injunction has been stayed, Vonage’s engineers have some breathing room to focus on these workaround designs, and its marketing folk can continue to burn through the company’s cash attempting to recruit new customers.
The company spends about half its revenue on attracting new customers. In the turbulent few weeks following the infringement ruling Vonage had said it would refocus its marketing on higher-converting channels, where the ratio of marketing spend to customer signup is higher.
The grassroots mobilization effort at FreeToCompete.com, which is not being passed off as anything other than a Vonage-operated site, is an interesting development.
There’s no guarantee it will be successful – Vonage has made some pretty big missteps with customer relations over the last year or two, such as offering them IPO shares that tanked miserably – it could be a relatively cheap way of retaining or attracting customers.
Vonage argues: Verizon’s actions against us have everything to do with limiting your freedom to choose a communications provider – a limitation which may ultimately drive up the cost of phone service for you and other US consumers.
The company says that there was a 13% drop in the average price of US long distance between 2002 and 2005 as a result of VoIP’s entry into the voice market.