Vonage, Verizon Vie for Victory

In yet another episode of "dueling press releases" this morning, both Verizon (NYSE: VZ  ) and Vonage Holdings (NYSE: VG  ) claimed victory in the federal district court round of their patent infringement lawsuit.

Verizon feels good because the federal jury found Vonage guilty of infringing on three of the seven Verizon patents under consideration, while Vonage prefers to point out that it was "vindicated" on four points. But you don't have to choose sides today.

The penalties imposed on Vonage are substantial enough to guarantee an appeal, and the injunction against using these patents will also be appealed on every level -- otherwise, Vonage might go out of business. This means that we're far from done with this saga.

The next venue will be the Federal Court of Appeals, and unless the result there, by some miracle, satisfies both parties, it's on to the Supreme Court. If you've followed similar patent breach lawsuits in the past, you know that this will take time. TiVo (Nasdaq: TIVO  ) launched its suit against EchoStar (Nasdaq: DISH  ) back in January 2004, and the companies are still in court today. Netflix (Nasdaq: NFLX  ) accused Blockbuster (NYSE: BBI  ) of profiting from its rival's ideas last spring, and that case has hardly moved at all.

Verizon probably has enough heft to force through a faster process, but it's likely happy to take it slow. After all, Vonage has never seen a red cent in profits or cash flows, and a lengthy and expensive lawsuit plays right into Verizon's hands. It's true that the Internet-based phone startup could become instantly profitable by cutting about two-thirds of its marketing budget, but that would also quash its massive user and revenue growth. And where would we go for our daily fix of annoying yodeling ditties? Perish the thought.

In short, see you in court -- again and again. Check back in a couple of years to see how it all turned out. There's even an outside chance that Vonage might be profitable by then -- but don't hold your breath.

Further Foolishness:

• The Worst Stock for 2007: Vonage
• Is Blockbuster a Patent Buster?
• The Lowdown on Patent Shakedowns

Netflix and TiVo are two of the stocks recommended by our Motley Fool Stock Advisor newsletter. Keep up with the latest on their lawsuits and everything else with a free 30-day trial subscription.

Fool contributor Anders Bylund is a Netflix shareholder, but holds no other position in any of the companies discussed here. He's a happy longtime customer of both Netflix and Vonage. You can check out Anders' holdings if you like, and Foolish disclosure is never up for debate.