HOLMDEL, N.J. – Verizon Communications has sued Internet phone carrier Vonage Holdings, claiming the company violated patent rights that Verizon has on technology for making phone calls over the Internet.
Holmdel-based Vonage contested the claim, saying it “believes that its services have been developed with its own proprietary technology and technology licensed from third parties and intends to vigorously defend the lawsuit.”
Vonage spokesman Mitchell Slepian would not comment further.
The company's stock dropped 12 percent in trading yesterday on the New York Stock Exchange, the latest blow to shares that have lost about half their value since the company went public in late May.
Verizon claimed that Vonage is infringing on at least seven of Verizon's patents regarding Internet phone service, a technology known as voice over Internet protocol, or VoIP.
The patents include inventions related to gateway interfaces between a packet-switched and circuit-switched network, billing and fraud detection, call services such as call forwarding and voice mail and methods related to Wi-Fi handset use in a VoIP network, the lawsuit said.
The complaint also claimed that “Vonage is aggressively marketing and advertising services made with Verizon's appropriated intellectual property.”
Vonage has added 1.1 million new customers in 15 months, “many of whom are Verizon's former customers,” the lawsuit said.
Vonage's plan to use funds from its initial public offering to expand its marketing and advertising on services that infringe on Verizon patents threatens “to shift more customer and goodwill to its business at Verizon's expense,” the complaint said.
The action by Verizon, the country's largest telecommunications company by revenue, follows a shareholder class-action lawsuit that claims Vonage improperly steered consumers toward investing in its $531 million initial public offering.
Shares of Vonage fell $1.12 to close at $8.48 on the NYSE. The stock has been trading in a 52-week range between $9.60 and $17.25. Verizon shares fell 37 cents, or 1.1 percent, to finish at $32.17 on the NYSE.
The lawsuit was filed in U.S. District Court in Richmond, Va., on behalf of subsidiaries Verizon Services of Arlington, Va., and Verizon Laboratories of Waltham, Mass.
