27 September 2007

Shares in Internet phone service Vonage fell
below $1 yesterday amid mounting concerns the company will be run out
of business by patent problems with rivals Verizon and Sprint.

Vonage was hit with its second major legal setback in two days when a
federal appeals court upheld a ruling that Vonage's technology
infringed two Verizon patents.

The decision bars Vonage from
using the patents in its core technology for making Web phone calls and
leaves the company on the hook for millions of dollars in damages.

The original court ruling ordered Vonage to pay Verizon $58 million in
damages and 5.5 percent of future royalties, but an appeals court,
which rejected a third patent infringement claim by Verizon, ruled
those numbers need to be re-evaluated.