By Sharla Sikes

Vonage received a double whammy this week in two judgments. Courts ruled in favor of Verizon and Sprint against Vonage in two similar lawsuits.

The suits, both alleging patent infringement, require Vonage to pay a hefty penalty: $69.5 million to Sprint and $58 million to Verizon. The Verizon case was decided in March, but has been in appeal as the company developed workarounds to the processes patented by Verizon.

Both settlements will wound—possibly mortally—the VoIP behemoth, currently one of the largest independent providers of VoIP service.

“The end may very well be in sight for Vonage, because the judgment represents at least 25 percent of its total value,” said Stan Schatt, vice president for broadband and wireless networks at ABI Research. “I think the handwriting is on the wall.”

The battle will continue as Vonage appeals the decision, on the grounds that the patents were “logical continuations of technology” that should not have been patented in the first place. Schatt calls the chances of the appeal’s success  ”somewhere between slim and none.”

Sept. 26, Vonage announced that the U.S. Court of Appeals for the Federal Circuit partially overturned the verdict in the Verizon case. The court upheld the decision on two of the patents but rescinded a third, threw out the $58 million fee and will retry the case.

The court based its decision to overturn the third verdict on information that the district court had improperly construed the verdict regarding a patent on wireless access to VoIP.

An injunction against Vonage has been stayed as the appeal went forward, but that will expire soon, unless Vonage is granted an emergency stay.

Meanwhile, stock prices continue to fall (prices are currently below $1 per share).  Adding to the company’s danger of going under is the lack of diversity of services: Current trends favor providers that can offer the “triple play” of broadband Internet access, VoIP calling and video.

“Vonage was important a few years ago when VOIP [voice over IP] was a brand-new service, but the future of Vonage isn’t that important to the industry anymore,” he said. “You can get VOIP services from Verizon, Comcast and other players. Regardless of what’s going on with this lawsuit, Vonage will probably fade away over the next few years.”

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