Vonage Loses Sprint-Nextel Patent Suit

Sprint Nextel Corporation filed a patent infringement in October 2005 against Vonage Holdings Corporations, Voiceglo Holdings Inc. and theglobe.com Inc. in the U. S. District Court for the District of Kansas. Sprint Nextel asserts these companies have willfully infringed seven patents relating to voice over packet technology developed by Sprint Nextel. The patents protect a series of innovations that enable the processing and delivery of packetized voice and data communications, including Voice over Internet Protocol (“VoIP”) communications. In the lawsuit, Sprint Nextel seeks an injunction that would prevent these companies from further misappropriating Sprint Nextel’s technology and infringing Sprint Nextel’s patents. The lawsuit also seeks unspecified monetary damages arising from the companies’ unauthorized use of the patented technology and the continued willful infringement of Sprint Nextel’s patents.

Vonage suffered another setback last wednesday with a jury verdict in favor of Sprint in its patent infringement case. The jury found Sprint's patents were valid, and that Vonage infringed them and awarded Sprint $69.5 million in damages, and set a 5% royalty rate for future use. This case echoes the trajectory of Verizon's patent infringement suit against Vonage last spring. Vonage'sappeal from the injunction issued against it in that case is still pending before the D.C. Circuit. Vonage put another $12 million into the court's escrow for the second quarter royalty payment and is due to pay another quarter's royalty at the end of September, totaling closes to $90 million.