Vonage Holdings , one of the pioneers behind Voice-Over Internet Protocol (VOIP) technology, was slapped with more bad news late yesterday. A jury in a U.S. District Court in Kansas City, Kansas, ruled that VG had indeed illegally used Sprint Nextel (S) patent technology. Vonage will owe S $69.5 million in damages, equal to 5% of the revenue earned while employing this borrowed technology.
Vonage is not potentially at risk of an injunction that would bar it from offering its Internet-based phone service at all (bad news for me, as that's who provides our home phone). An intellectual-property attorney stated the obvious in a statement: Vonage is in trouble.
The embattled company refutes these claims and says it will file an appeal against the ruling. Vonage's chief legal officer noted that We are disappointed that the jury did not recognize that our technology differs from that of Sprint's patents. An appeal would likely postpone any injunction.
Tuesday's legal defeat marks the second time Vonage has come across patent-related trouble this year. In March, a jury ruled that VG had illegally used patents held by Verizon Communications (VZ). The company was ordered to pay $66 million along with a 5.5% royalty fee in the future. A final decision in the matter has yet to be reached.
In Tuesday's trading, VG plunged 34% to an all-time low of $1.30.