Jury orders Vonage to pay $58 mln in patent case

By Peter Kaplan

ALEXANDRIA, Virginia (Reuters) - A jury dealt a blow to loss-making Internet phone provider Vonage Holdings on Thursday, ordering the company to pay $58 million (30 million pounds) plus royalties on future sales for infringing three patents owned by Verizon Communications.

The eight-member federal jury found that Vonage had infringed on three of five Verizon patents covering key Internet phone call technology. It rejected Vonage's argument that the patents were invalid and said Vonage must pay a 5.5 percent royalty rate on sales going forward.

However, the penalties were less than the $197 million in damages and a 19 percent royalty rate sought by Verizon.

Vonage said it would appeal the verdict. Customers "should see no change" in their service, said Vonage, which reported a net loss of $65 million in its fourth quarter.

Stanford Group analyst Clayton Moran said the verdict was harsher on Vonage than he expected. "In and of itself, it doesn't render its business model as not viable, but I think it will have a significant impact on the stock," Moran said.

Shares of Vonage shed nearly 4 percent after the verdict to $4.86 in regular trading on the New York Stock Exchange before dipping another 4 percent to $4.67 in extended trading.

Vonage, which priced at $17 per share in its initial public offering in May last year, ranks as the worst-performing IPO in the past 15 months, according to analysts.

The patents at issue in the case are related to voice-over-Internet Protocol (VoIP) technology, which allows consumers to make calls over the Internet.