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Oct. 8, 2007

Today, Vonage said it has settled a patent lawsuit filed by Sprint Nextel for $80 million in cash.

Last week, a jury in the U.S. District Court in Kansas City ruled Vonage infringed on six Sprint patents, and ordered the company to pay $69.5 million in damages.

The two companies have said today's settlement resolves all current and future claims in the ongoing dispute.

The $80 million Vonage agreed to pay consists of $35 million for past use of the patents, $40 million for a fully paid future license, and $5 million in prepayment for services.

For its part, Sprint agreed to license Vonage on over 100 of its patents on connecting calls between a regular telephone network and a packet-switched network such as the Web.

Earlier this year, another jury awarded Verizon Communications $58 million in damages, plus 5.5 percent royalties on future revenues after finding that Vonage violated three Verizon patents.

However, litigation is ongoing in that suit. Vonage says it has deployed workarounds for two of the patented technologies.

The patent litigation has put heavy pressure on Vonage's stock, but the company has a reserve of cash pulled in by its initial public offering last year, when its stock sold for $17 a share.

Sharon O'Leary, chief legal officer of Vonage said "we are pleased to resolve our dispute with Sprint and enter into a productive future relationship. We are looking forward to this with optimism."

Vonage had $344 million in cash on June 30, 2007, according to its latest quarterly earnings report.

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Source: Wireless Week