Vonage settles Sprint's patent claim

Vonage agrees to pay Sprint Nextel US$80 million to resolve a patent dispute.

VOIP provider Vonage Holdings has settled a patent dispute with Sprint Nextel by agreeing to pay Sprint about US$80 million, the two companies announced this week.

As part of the agreement, Sprint has agreed to license Vonage its VOIP (voice over Internet Protocol) portfolio, which includes more than 100 patents covering methods and components to connect voice calls between a traditional telephone network and an IP network, Sprint said.

A jury in the US found on September 25 that Vonage infringed on six patents owned by Sprint. The jury awarded Sprint US$69.5 million in damages, amounting to 5 percent of Vonage's revenue during the infringing period.

The agreement announced Monday resolves the patent dispute, Sprint said in a press release. Vonage had originally said it planned to appeal the patent award.

Vonage and Sprint will enter into a business relationship as part of the agreement, Vonage said. The US$80 million payment includes US$35 million for past use of Sprint's licenses, US$40 million for a future license, and US$5 million in prepayment for services from Sprint, Vonage said.

"We are pleased to resolve our dispute with Sprint and enter into a productive future relationship," Sharon O'Leary, Vonage's general counsel, said in a statement. "We believe this deal is good news for Vonage, our customers and our shareholders."

Vonage, with nearly 2.5 million VOIP customers, has faced a similar patent challenge from Verizon Communications.

Earlier this year, a US court found Vonage infringed on Verizon patents, and a judge ordered an injunction that would have prevented Vonage from signing up new customers. Vonage won a stay of that injunction and is appealing the original infringement ruling.

In August, Vonage said it had nearly completed rolling out workarounds for two of the three patents claimed by Verizon.

In its second quarter this year, Vonage, the largest independent VOIP provider in the US, added 57,000 customer lines, compared with 256,000 in the same quarter in the previous year.

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