Vonage Loses $69.5 million Patent Lawsuit to Sprint Nextel

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Vonage Loses $69.5 million Patent Lawsuit to Sprint Nextel

5:45 am on September 27, 2007 | Category: Business, VoIP, Law

Vonage Holdings Corp. was ordered to pay $69.5 million to wireless giant, Sprint Nextel, on Tuesday after a landmark patent infringement ruling by a U.S. federal court jury.

Vonage shares, which were offered at $17 in last year’s IPO, plunged almost 34% Tuesday, to close at $1.30 on the New York Stock Exchange, after which the company promised to appeal the Sprint patent decision. The stock dropped an additional $0.34, to close at $0.96 yesterday (Wednesday), after losing a key appeal in the Verizon patent case, for a total loss of 94.4% since May 2006.

‘’We are disappointed that the jury did not recognize that our technology differs from that of Sprint’s patents,'’ commented Sharon O’Leary, the chief legal officer for Vonage. ‘’Our top priority is to provide high-quality, reliable digital phone service to our customers.'’

Sprint Nextel spokesman, Matt Sullivan, meanwhile said that his company was ‘’extremely pleased'’ with the verdict, noting that Sprint would seek a permanent injunction against Vonage for using the patented technology.

This is the second major patent ruling against Vonage, which lost a key patent case against Verizon Communications earlier this year.

Telecom and media analyst, Greg Gorbatenko, of Jackson Securities, said that the Sprint decision ‘’feels like a death knell'’ for Vonage, as legal opponents threaten the VoIP startup’s reputation with consumers.

‘’It’s just bad news any way you slice it for Vonage,'’ Gorbatenko said, noting that the company should be recognized for pushing internet telephone services, but has failed to make money in doing so.

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It is likely that between this mess and the Sunrocket melt down – many people will be scared off by any VoIP services provider and so stem this likely erosion, service providers will undoubtedly begin to come up with great deals. I for one, am glad. I want to switch to a company that I feel won’t go under and I found an unadvertised special from Net2Phone that seems good. 3 months free and then $19.95 per month thereafter. They seem to be one of the first to have been in this market (for 12 years) and they are well funded by IDT. Anyone have any experience with them?

Comment by Mark — October 6, 2007 #