Infrastructure // Networking
06:42 PM
Connect Directly
Repost This

Vonage Settles With Sprint, Still Faces Verizon Judgment

Under the agreement, Vonage will pay a total of $80 million, including $35 million for past use.

Internet phone startup Vonage on Monday settled its legal dispute over patents to voice-over-IP technology with Sprint Nextel, clearing the way for the company to concentrate on building its business, the company said.

"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," said Sharon O'Leary, general counsel for Vonage.

Under the agreement, Vonage will pay a total of $80 million: $35 million for past use, $40 million for a license going forward, and $5 million in prepayment "for services." The companies also said they will enter an unspecified business relationship.

A jury in federal court found in September that Vonage had infringed patents belonging to Sprint and ordered the company to pay $69.5 million in damages plus future royalties. Vonage had said it would appeal the verdict.

A pioneer in selling cheap Web-based phone services to consumers looking for alternatives to landline voice services, Vonage has been plagued by legal setbacks and high marketing costs. Last month a U.S. appeals court upheld a verdict that Vonage had infringed patents held by Verizon Communications. Vonage was ordered to pay more than $58 million in damages plus a 5.5% royalty on future revenue.

Vonage has said it has begun rolling out an alternative solution that does not violate the Verizon patents, which cover the way Internet calls are routed over traditional phone switches and are considered much more fundamental than the Sprint technology to the functioning of the Vonage network. No settlement plans have been announced in the Verizon case, and Vonage has been mulling its legal options since its initial appeal was rejected.

In August, Vonage reported that its revenue for the second quarter jumped 43% to $206 million while its operational loss narrowed to $18 million from $60 million in the same period a year ago.

Vonage stock, which has plummeted in value since its May 2006 IPO, closed Monday up 123% on the New York Stock Exchange.

Comment  | 
Print  | 
More Insights
2014 Private Cloud Survey
2014 Private Cloud Survey
Respondents are on a roll: 53% brought their private clouds from concept to production in less than one year, and 60% ­extend their clouds across multiple datacenters. But expertise is scarce, with 51% saying acquiring skilled employees is a roadblock.
Register for InformationWeek Newsletters
White Papers
Current Issue
InformationWeek Elite 100 - 2014
Our InformationWeek Elite 100 issue -- our 26th ranking of technology innovators -- shines a spotlight on businesses that are succeeding because of their digital strategies. We take a close at look at the top five companies in this year's ranking and the eight winners of our Business Innovation awards, and offer 20 great ideas that you can use in your company. We also provide a ranked list of our Elite 100 innovators.
Twitter Feed
Audio Interviews
Archived Audio Interviews
GE is a leader in combining connected devices and advanced analytics in pursuit of practical goals like less downtime, lower operating costs, and higher throughput. At GIO Power & Water, CIO Jim Fowler is part of the team exploring how to apply these techniques to some of the world's essential infrastructure, from power plants to water treatment systems. Join us, and bring your questions, as we talk about what's ahead.