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Last Updated: Friday, 9 March 2007, 11:57 GMT
Vonage loses phone patent dispute
Vonage promotional booth
Vonage floated on the stockmarket in May 2006
Internet phone company Vonage has lost a patent case that could threaten phone services for its 2.2 million customers.

A US jury ordered Vonage to pay $58m ($30m) to rival Verizon for infringing three patents, plus royalties of 5.5% of future sales.

Verizon has now asked for an injunction that would stop Vonage from connecting its customers to landline telephones.

Vonage is a pioneer in the market for voice-over-internet telephony, which allows users to make cheap phone calls.

Verizon had asked the jury to impose a $197m penalty and argued that the internet phone company had violated a total of five patents.

Vonage had "done very well with our patents and our technology for a number of years", said Verizon's lawyer, Dan Webb. The company had told the jury that it had lost more than $280m as a result of these patent violations.

Vonage is disputing the claim, arguing that Verizon should not have been granted the patents in the first place.

The company said it would appeal against the decision and promised customers that they "should see no change" in their phone service.

Jan Dawson of telecoms consultancy firm Ovum described the decision as "clearly a victory for Verizon, whether you take the cynical view that the company is trying to knock out an upstart competitor or the face value view that it is seeking to protect its patents".

The $58m payout was about as high as Vonage's quarterly losses, he said, and while the outcome would not change "the fact that Vonage is still hopelessly unprofitable... it does make a bad situation worse?.

Vonage shares dropped 10% on the news, before recovering to close at a loss of just under 4%.

Vonage floated on the New York Stock Exchange in May 2006.

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