Sept. 25 (Bloomberg) -- Vonage Holdings Corp., an Internet phone-service provider, infringed six patents owned by competitor Sprint Nextel Corp. and should pay $69.5 million in damages, a jury decided.

Vonage shares fell 66 cents, or 34 percent, to $1.30 at 4:32 p.m. in New York Stock Exchange composite trading. Trading was halted for almost two hours immediately after the verdict.

``Poor Vonage, they can't get a break,'' TeleGeography Inc. analyst Stephan Beckert said. ``I don't think it's any secret that they're not a well company.''

The jury finding today in Kansas City, Kansas, is the second such loss for Vonage this year. After the Holmdel, New Jersey- based company lost a $66 million patent case to Verizon Communications Inc., it said it might be forced into bankruptcy if it lost the use of the technology disputed in that suit.

Besides the damages, Vonage must pay Sprint a 5 percent royalty on future revenue, the jury said today. Vonage will ask the court to throw out the patent-infringement verdict and, if unsuccessful, will appeal the ruling, the company said.

Vonage said it is developing technological workarounds to the disputed patents. The company has also been working on alternatives to New York-based Verizon's patents to avoid paying royalty fees while that ruling is being appealed.

The company's future may depend on the alternative technology, an analyst said.

Need for Workarounds

``If they can't right their ship and have workarounds --that they've been working on for a very long time -- if they can't do that soon, then the writing seems to be on the wall for them,'' said David Lemelin, of the Scottsdale, Arizona-based research firm In-Stat, who doesn't own the shares.

Vonage, which first sold shares to the public in May 2006, has never reported a profit and said subscriber growth slowed in the second quarter as it cut back on marketing. The company has $248.2 million in debt due in 2010.

The company reported a net loss of $286.1 million in 2006 after it spent most of its revenue on marketing. Former Chief Executive Officer Michael Snyder resigned following the Verizon verdict in March. Chairman Jeffrey Citron cut the company's workforce by 10 percent and reduced spending on ads and marketing by $110 million for the year.

In the second quarter, growth slowed to 57,000 new customers, missing the 135,000 predicted by Soleil Securities Corp. analyst Todd Rethemeier and the 150,000 Stanford Group Co. that analyst Clay Moran projected.

Trading Halted

Trading in Vonage shares was stopped at 1:57 p.m. today, after the verdict sent them down 7.6 percent in minutes. The shares continued to plunge in the market day's last 13 minutes when regular trading resumed. Vonage's shares have dropped 81 percent this year. Sprint gained 13 cents to $18.43.

``We feel great about the result,'' B. Trent Webb of Shook, Hardy & Bacon, Sprint's lawyer, said in an interview. ``It's a vindication of Sprint's R&D and effort to innovate and push the envelope.''

Webb said he must confer with Sprint before saying whether his client will ask U.S. District Judge John Lungstrum for an order permanently barring Vonage from using the technology.

Sprint, the third-largest U.S. phone company after AT&T Inc. and Verizon, sued Vonage in 2005, seeking cash compensation and a court order to stop Vonage from using six inventions that help connect Internet phone calls.

Vonage claimed it didn't use Sprint's inventions. It contested the validity of all six patents, arguing they shouldn't have been issued.

Triple Damages

The jury of five women and three men rejected that argument, upholding the patents' validity. It decided Vonage infringed deliberately, meaning Lungstrum can as much as triple the award if he agrees.

Sprint Corp., based in Reston, Virginia, was based in Overland Park, Kansas, until it merged with Nextel Communications Inc. in 2005.

The Sprint verdict is the 13th-largest in the U.S. in 2007, according to data compiled by Bloomberg, and the fourth-largest in a patent case.

The case is Sprint Communications Co. v. Vonage Holdings Corp., 05-2433, U.S. District Court, District of Kansas (Kansas City).

To contact the reporters on this story: Jeff St.Onge in Washington at jstonge@bloomberg.net; Amy Thomson in New York at athomson6@bloomberg.net.

Last Updated: September 25, 2007 18:38 EDT