Vonage to Pay Sprint $80 Million to Settle Patent Dispute

Oct 09, 05:10 AM

Current Headlines: By Jason Gertzen, The Kansas City Star, Mo.

Oct. 9--Vonage Holdings, an Internet telephone company, will pay Sprint Nextel Corp. about $80 million to settle a patent dispute.

The companies announced the agreement Monday after a federal jury decided late last month that Vonage was improperly using Sprint technology and should pay at least $69.5 million.

Vonage shares plummeted after that ruling, which followed another lawsuit that determined Vonage had also infringed on technology patented by a unit of Verizon Communications.

Vonage's stock more than doubled on the news Monday, closing at $2.57, up $1.42.

Under the settlement, Vonage will pay $35 million for past use of Sprint's patented technology, $40 million for a license to use the technology in the future and $5 million in prepayment of services.

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

Vonage says it has 2.45 million subscribers who arrange for telephone service over high-speed Internet connections.

"We view this settlement and licensing agreement as a validation of the strength and breadth of our patent portfolio," said Harley Ball, Sprint Nextel's vice president of intellectual property. "This is an affirmation of Sprint's research and development."

To reach Jason Gertzen, call 816-234-4899 or send e-mail to jgertzen@kcstar.com.

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