Vonage has been refused leave to appeal in its patent spat with Verizon and faces a bill of $120m in damages.

The judge at the US Court of Appeals for the Federal Circuit denied the application for an appeal, and Vonage will now pay $117.5m to Verizon and an additional $2.5m to charity.

The fine was levied after a court found Vonage in violation of three patents owned by Verizon concerning VoIP and call features.

"We were not surprised, but we are disappointed that the court denied our request for a rehearing of the case," Vonage spokesman Charlie Sahner told Bloomberg. "We are pleased to continue putting litigation behind us."

Vonage has had a difficult few years. The price at its initial public offering was $17 per share but this fell by over 20 per cent on the first day's trading, and now stands at just over $2.

The firm has already said that it may not be able to meet its obligations over debt, with potentially $253.5m due by December 2008.

The company settled an earlier patent dispute with Sprint Communications with a payout of $80m.