Shares of VeriFone (NYSE:PAY) ticked about 6.5% lower Tuesday after the electronic payments company said it will take a charge of $17.6 million in a patent infringement settlement and could face even bigger charges in the future.
The San Jose, Calif.-based company said a jury voted on June 8 that VeriFone products infringed on Cardsoft’s patents. The penalty calls for a royalty rate of $3 per unit and total royalties of $15.4 million covering past sales.
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VeriFone said it intends to appeal the verdict and is currently evaluating other alternatives, including post-judgment motions, but recorded the $17.6 million charge in its latest period ended April 30.
The payments platform provider said it is “reasonably possible” that Cardsoft will try to claim further royalties and damages on future U.S. sales at a rate higher then that awarded by the jury.
Cardsoft may also appeal the ruling of non-willful infringement, hoping to score heftier fees by proving VeriFone knowingly infringed on its patents.
While VeriFone said additional unfavorable rulings could have a material adverse effect on its business, it would not estimate the range of any further damages.
“We intend to vigorously pursue our appeal of this verdict and to defend any further claims related to this litigation,” VeriFone said in a statement.
The patent settlement follows a wave of related litigation in the tech sector, including patent infringement suits between Apple (NASDAQ:AAPL), Google (NASDSAQ:GOOG) and Oracle (NASDAQ:ORCL).
Deutsche Bank (NYSE:DB) on Tuesday cut VeriFone’s price target to $30 from $40 on a sell rating. Shares of VeriFone are down about 42% so far this year.