By Peter Kaplan
A federal jury on Wednesday began reviewing evidence in Verizon Communications Inc.'s $197 million patent infringement case against Internet phone service provider Vonage Holdings Corp.
The eight-member jury deliberated for about three hours and sent the judge several notes asking for clarification of some terms used in the lawsuit.
Although the panel asked to work into the night, U.S. District Judge Claude Hilton sent jurors home and said deliberations would resume at10 a.m. ET (1500 GMT) on Thursday.
In closing arguments, a lawyer for Verizon told jurors that Vonage had built its business based on Verizon's patents and said Vonage should be forced to pay damages.
Going forward, Vonage also should be ordered to pay Verizon a royalty of $4.93 per telephone line per month for its voice-over-Internet protocol (VoIP) technology, said Verizon lawyer Dan Webb.
"This company has done very well with our patents and our technology for a number of years," Webb told jurors.
Verizon claims that Vonage is infringing on five patents on technology devised by Verizon engineers in the mid-1990s that is central to Internet phone service.
The patents cover technology that allows calls made through the Internet to be connected to traditional phone numbers; that enable Internet phone service to use features such as call waiting and voicemail; to coordinate billing; and to connect through a wireless network.
Vonage insists that Verizon's patents were invalid and were not infringed upon by the Vonage system.
LARGER EFFECT ON VoIP
Vonage's lawyer, Roger Warin, said Verizon is using the patent infringement allegation to try to destroy Vonage and thwart competition.
"We didn't take their (intellectual) property," Warin said.
Warin provided for jurors what he said were differences between the technology that Vonage uses and the patents owned by Verizon.
And Verizon's patents were invalid anyway, he said, because the technology was invented earlier by Net2Phone, another provider of VoIP service.
If the jury finds that Vonage infringed Verizon's patents, the judge could issue an injunction barring Vonage from using the technology.
Vonage has said that the outcome of the case would not disrupt its business.
One investment advisory firm said the lawsuit is important because it spotlights the extent to which VoIP relies on open standards rather than proprietary technology. "The outcome of the case against Vonage will likely spill over to the larger VoIP sector," said Stifel Nicolaus & Co in a report.
Vonage has struggled to turn a profit, and its share price has fallen sharply since its initial public offering last May at $17. On Wednesday afternoon, Vonage edged down 17 cents to $5.05 on the New York Stock Exchange.
Copyright 2007 Reuters Limited.
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