Vonage settles patent case with Sprint

Internet telephony provider Vonage said Monday that is has settled its patent dispute with Sprint Nextel.

The two companies have entered into a licensing arrangement that allows Vonage to use patents for voice over Internet Protocol, or VoIP, technology that are held by Sprint.

Vonage has agreed to pay Sprint a total of $80 million, according to the company. This includes $35 million for past use of the license, $40 million for a fully paid future license and $5 million in prepayment for services.

In September, a Kansas jury found that Vonage had infringed six Sprint patents. And it ordered Vonage to pay $69.5 million in damages, plus 5 percent for future damages.

Literally the next day, Vonage lost its appeal in its patent legal battle with Verizon Communications. In March, a jury in Virginia found that Vonage had infringed on three patents. And the court ordered Vonage to pay $58 million in damages.

With this latest settlement, Vonage has at least alleviated some of the legal pressure on the company.

"We believe this deal is good news for Vonage, our customers and our shareholders," Sharon O'Leary, Vonage's general counsel, said in a statement. "It allows us to put this litigation behind us and continue to focus on our core business by removing the uncertainty of legal reviews and long-term court action."

[MarkR445]

Pity

Pity that this debacle is giving the entire VoIP segment a black eye because there are great companies out there that focused on the technology and not the ?sizzle?. Hey, I liked the Vonage commercials as much as the next guy, I only wish they had spent more time and money making sure they had the rights to use the technology they did. I still like the idea of VoIP and finding alternatives is hard because I don?t want to be stranded like many Sunrocket customers were recently. It seems there are good alternatives like Net2Phone and Lingo, but it is really too bad that such a high profile provider will probably set this whole category back in people?s minds.

[nicmart]

AT&T?

I use CallVantage, AT&#38;T's VoIp service. I wonder if they licensed the <br />patents, worked around them, or are waiting to be clobbered.

[mikeburek]

free market innovation

It's great to see the innovation that Sprint and Verizon had. They were way ahead and already developed patents, but they didn't have any competition so they didn't release anything new. They just wanted to keep charging people lots of money, while hold the IP rights to something that would help customers. That's is a monopolistic approach by Sprint and Verizon - making the barrier to market entry by another very very hard.

[skrubol]

Readylink

Sprint's Readylink (Walkie Talkie) service uses VOIP. I believe Verizon has something similar.