Sprint Says Jury Finds Vonage Infringed on Six Patents

Wednesday, 26 Sep 2007 | 10:38 AM ET

A U.S. federal jury found Vonage Holdings infringed six patents owned by Sprint Nexteland ordered Vonage to pay $69.5 million in damages, plus royalties, Sprint said on Tuesday.

The decision was the latest legal setback for Vonage, the loss-making Internet phone company that has also been found to infringe patents belonging to Verizon Communications.

Shares of Vonage, which had been halted on the New York Stock Exchange early Tuesday afternoon, plunged 33.67 percent to $1.30 when they resumed trading just before the final bell.

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Sprint sued Vonage in 2005, making 61 claims of violations of seven patents related to telecommunications technology. The U.S. District Court in Kansas had rejected Vonage's motion to dismiss the case last month.

"The jury awarded $69.5 million in damages for past infringements and a 5 percent royalty rate on future revenue," related to the patents, Sprint spokesman Matt Sullivan said.

Vonage shares have fallen nearly 90 percent from their initial public offering price of $17 in May 2006 on worries about competition from cable operators and other companies offering Internet-based calling services, as well as concerns about high marketing costs.

Vonage has suffered a series of legal setbacks. A federal jury earlier this year found Vonage had infringed three patents belonging to Verizon Communications.

A Vonage spokeswoman had earlier confirmed that a court had reached a decision on the Sprint case, but could not provide further details on the decision.

A U.S. District Court had rejected Vonage's motion to dismiss the case last month.

Vonage Plans Appeal, Tech Workaround

Vonage said it will appeal the patent verdict.

"Vonage will ask the court to set aside the verdict, and if it is not granted, will vigorously pursue an appeal of the decision, including the underlying issue of liability and the willfulness aspect," Vonage said in a statement, adding that it will try to develop technology to avoid infringing the patents.

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