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Patent Violation Charges Against Vonage

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Vonage LogoPatent violation by VoIP service provider Vonage took a hit from Federal court, which declared that Vonage has violated seven patents held by wireless phone carrier Sprint Nextel as mentioned in an article in arstechnica.com. It follows a similar jury verdict against the company in March, in which Verizon successfully recovered for damages caused due to violation of patent.

The ruling comes as a huge financial burden for Vonage. The damages of $69.5 million charged to Vonage represents an estimated one third of Vonage’s entire market capitalization. In addition, Vonage was charged a 5 % royalty on all future Vonage revenues. This is undoubtedly a shocking experience for the company, which suffered losses since its existence, and currently does not have enough cash on hand to last a year at the rate of current losses. An analysis by  Ars’ suggests that Verizon’s patents focus less on technology or implementations, and more on general concepts that are essential for  telephony.

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