Vonage Appeal Denied in Verizon Patent Infringement Case

The U.S. Court of Appeals for the Federal Circuit in Washington has denied Vonage’s request to appeal its patent infringement suit loss against Verizon. The decision means Vonage will have to pay Verizon the full $117.5 million the companies agreed to during a settlement last month, plus an additional $2.5 million to charity (full summary). Had Vonage won the appeal, it would have owed Verizon only $80 million. Vonage spokesman Charlie Sahner said the court’s decision was “disappointing” adding, “We are pleased to continue putting litigation behind us and keep focusing on our core business.” Vonage has already burned through roughly $300 million of the $491 million it raised through its June 2006 IPO. The company has set aside $146 million to pay for patent dispute settlements with Verizon and Sprint. As of June 30 of this year, the company had $197 million in cash, versus $253 million in debt. Financial blogger Larry Dignan wrote before the recent court decision: “The big question is whether Vonage will have enough cash to hold out if it loses those appeals.” Investors were clearly concerned, sending VG shares lower by 4.05% in regular trading Thursday following the ruling, and another 3.3% lower in after-hours action.

Sources: Wall Street Journal, TheStreet.com, AP
Commentary: Vonage Reports Jump in Revenue and Settlement • Vonage Surges 71% on Verizon Patent Settlement • Vonage Shares Jump, But Churn and Debt Challenging • Vonage Loses Another Patent Case, This Time To Sprint
Stocks to watch: VG, VZ. Competitors: T, S. ETFs: WMH, VOX

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