Vonage Ordered to Pay $69.5M to Sprint

Internet telephone company Vonage Holdings Corp. may be in big trouble after being ordered in federal court Tuesday to pay Sprint Nextel $69.5 million in damages for infringing on six telecommunications patents owned by Sprint Nextel Corp. In addition, jurors awarded Sprint Nextel a 5% royalty from Vonage on future revenues. Vonage said in a written statement that it would appeal the decision but also would begin developing workarounds so it won't need to use the disputed technology.

"We are disappointed that the jury did not recognize that our technology differs from that of Sprint's patents," said Sharon O'Leary, chief legal officer for Vonage. "Our top priority is to provide high-quality, reliable digital phone service to our customers." On the other hand, Matt Sullivan, a spokesman for Reston, Va.-based Sprint., said the company was "extremely pleased" with the verdict and that Sprint plans to ask U.S. District Judge John Lungstrum for a permanent injunction against Vonage using the patented technology. Greg Gorbatenko, a telecommunications and media analyst for Jackson Securities, said the decision "feels like a death knell" for Vonage because future revenue will likely dry up, preventing the company from investing in better technology or improving customer service.

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