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Vonage trips $69.5m patent

Promises to side-step its way out, again

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VoIP provider Vonage has lost another patent battle, this time with Sprint Nextel, which owns six infringed patents and stands to gain almost $70m in a court-ordered payout.

The case was lodged by Sprint back in 2005, but Vonage has been arguing that the patents should never have been approved, and that Vonage technololgy is completely different - arguments which failed to convince the Kansas jury.

Instead, Vonage has been ordered to pay five per cent of its revenue during the infringing period, calculated as $69.5m.

Vonage will appeal the case, adding to its considerable legal casebook. The firm's chief legal officer said: "Vonage has already demonstrated that it can keep its focus on customers and on its core business while managing ongoing litigation."

We hope its engineers are equally good at maintaining service while making changes, as the company has promised to find ways to work around the Sprint Nextel patents, while still implementing the changes necessary to side-step Verizon's patents.

Vonage shares dived 33 per cent on the news, and it's news the company could do without at a time of declining customer growth and increasing churn.

Vonage may have been the vanguard of consumer VoIP services, but with the incumbents cutting prices and even offering VoIP services, it has become more difficult for the company to differentiate its service. Vonage still has considerable cash reserves, enough to fund an appeal or two, but even they won't last forever. ®

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