September 25th, 2007
BULLETIN: Vonage loses patent infringement suit
Less than an hour ago, a jury in Kansas City, Kan. decided that Vonage is guilty of infringing on VoIP-related patents held by SprintNextel.
The jury held that Vonage should pay SprintNextel $69.5 million in damages, as well as a 5.5 percent royalty on future revenue.
Vonage had claimed it didn’t violate these patents, and these patents are invalid.
This can’t be good news for Vonage, or its investors. At around 2 p.m. EDT, Vonage’s per-share price was a lowest-ever $1.81. Update: No new Vonage stock price updates in nearly an hour; it appears they’ve shut down trading for the day.
Holding for comment from Vonage, but I am certain they will appeal as fast as imaginable.
Although Vonage would not have to pay until all avenues of appeals (which could take years) are exhausted, “The big question is whether Vonage will have enough cash to hold out if it loses those appeals,” my colleague Larry Dignan writes. “Meanwhile, lawyers cost money too.”
As for me I think the end game ought to be, Vonage sells some or all of itself to Sprint, and the liabilities figure into the transactional costs.
Russell Shaw is an enterprise computing journalist, analyst and author based in Portland, Oregon. See his full profile and disclosure of his industry affiliations.
