Verizon returns serve: Vonage wrote the jury instructions it’s complaining about
In response papers it just filed with the federal patent appeals court, Verizon (VZ) makes a compelling argument for rejecting Vonage’s request for a new trial in light of Monday’s landmark Supreme Court ruling.
Vonage (VG), which is appealing a patent infringement judgment entered last month that threatens to put it out of business, had asked the appellate court to send the case back for retrial, on the theory that the trial judge’s instructions to the jury were inconsistent with the new standards on “obviousness” just articulated by the Court in KSR International v. Teleflex. (For earlier post on KSR ruling, click here.)
In a response filed just minutes ago, however (for which, click here ), Verizon’s lawyers write: “Not only did Vonage fail to object to the instructions given, it actually proposed the jury instructions it now challenges.” They add that it’s hard to argue that Vonage was blind-sided by the KSR ruling, in that the Supreme Court agreed to hear KSR case “in June 2006 — about the same time that this lawsuit was filed — and KSR was fully briefed and argued well before the trial of this case.” In any event, they add, there’s nothing inconsistent with KSR in the instructions Vonage proposed and that the judge read.
In an email reply to Verizon’s response, Vonage spokesperson Brooke Schulz writes: “We didn’t challenge those jury instructions because the standard convention for obviousness was part of settled law, therefore there was no grounds to challenge it at that stage. Now that the Supreme Court has expanded the test for obviousness, there is now grounds to challenge those instructions based on the new Supreme Court ruling.
It’s presumptuous for a legal reporter to predict how an august federal appeals panel might rule, but for whatever it’s worth, I like Verizon’s chances at the moment.
There are alternatives to Vonage besides Verizon. Packet8 is a very good VOIP company, for example. I’ll be switching to them if Vonage goes down, but I doubt they will.
Mr. Parloff has echoed the familiar but incorrect sky-is-falling message that Vonage will be “out of business” if they lose their appeal. For context, consider that the worst case licensing fees for all three patents are expected to be about 5% of revenues. That means a $1.25 increase in the monthly subscription fee. Further, the damage award amounts to around 15% of last year’s marketing budget and about 10% of available cash. Although not good news for this struggling company, even the unlikely worst case scenario is not a show stopper.
(Disclosure – I am a subscriber, but not a stockholder)
I am a telcom specialist, I just finished my MSEE from RPI. I am thoroughly familiar with the patents that are under debate. It blows my mind that they were allowed in the first place, and the fact that Vonage didn’t go through the history of the patents and how they tie together with the open whitepapers created through The Internet Society, http://www.cs.columbia.edu/sip/drafts.html
Of course these patents are obvious, maybe not to the common person, but to anyone in the business it was effectively patenting the sky being blue.
Sometimes things are technical, and if the jury wasn’t treated like idiots and exposed to the technical side of the debate they would have had a real change to make a fair decision.
The suit by Verizon might be motivated not only by perceived loss of revenue, but by a desire to maintain control of telephone communications and keep prices high. If Verizon is so concerned, why don’t they institute their own technology for the benefit of their customers (good old capitalist competition)? They are mad that Vonage had the motivation to provide phone service for $15 a month! HEY, VERIZON, STOP YOUR MONOPOLISTIC PRICE GOUGING! I think that this is pure and simple price fixing.
i totally disagree with mark. the matter he describes as a ‘technicality’ is a fundamentally a part of procedure and law. the fact is Vonage lost at trial. a jury heard the evidence and all the facts and circumstances and concluded that Verizon had intellectual property that was infringed upon. mark also seems to infer that if Vonage were permitted this re-review under the new obviousness standard that Verizon’s patents would not stand. this is a huge leap in logic and ignores that patents are presumed validly issued. Vonage was clearly unsuccessful in proving its case. a new standard does not change the federal jury ruling to that fact. jason galanis, Geomas
Apart from the persuasive logic which seems to favor Vonage , I am emotionally in their corner . To put a tangible “face” on the outcome , I will literally see a 66% increase in my phone service costs if Vonage loses .
I like Vonages chances at winning this.
While they didn’t object to this, as the Vonage spokesperson says, why would they? It wasn’t the law at the time. Now, during the appeals phase, it has been decided by the supreme court and because it was an issue at trial, it should be part of the appeal.
For Verizon to now try to argue that VG should lose this on some mere technicality is really showing how desperate they are I think.
The court isn’t going to let them win on something like that. The stakes are too high for Vonage.
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I like Vonage chances. The mistake Vonage made was not doing a good job at challenging the patents in the first place. This is why they need a retrial- they can’t introduce the new evidence in the appeal. Perhaps Vonage should have asked the Internet Communities for help before they staged their poor defense?
The problem is the Lawyers, as well as the Jury, just doesn’t understand the technology in play here and, as a result, can’t understand why the patents should never have been given in the first place.
As for the gratuitous Packet 8 Plug: I already tried to switch to Packet 8. After almost 30 days of going back and forth with Tech Support from P8 we have all decided its better that we give up then keep trying to get this to work. I have a fairly straightforward configuration and P8 kept crashing my network connection. I do not recommend them.