Vonage ready to rumble

You know things are getting pretty grim when even we start having sympathetic thoughts for Vonage, the residential VoIP service provider that got KO-ed by Judge Hilton who gave the company two weeks to stop infringing on Verizon’s patents.

Today the company is getting hit by a class action suit that alleges that Vonage over promised and under-delivered on its VoIP service. On its legal troubles with Verizon, the company issued a press release, promising to soldier on, and fight Verizon in the courts.

“Friday’s events represented one small step in what is sure to be a long legal battle. The fact is we’ve been preparing for this verdict and the possibility of an injunction for months. Anyone who’s counting Vonage out is making a huge mistake.” Mike Snyder, Vonage’s chief executive officer.

These are three likely scenarios facing Vonage.

  1. If Judge Hilton grants a stay, then Vonage can continue operating and will have to pay royalties on an ongoing basis.
  2. If no stay is granted, then Vonage will seek a stay from the appeals court.
  3. If Vonage fails to get a stay from either of the two courts, then it will have to develop a work around, which is not that far off in the future, and thus avoid any shut down of the service.

Whatever the outcome, Vonage’s financials are going to take a hit. Furthermore, the Vonage decision will basically tip the balance of VoIP power in favor of cable operators who are watching this legal drama with the same attention Lost gets from television junkies.