Vonage Settles Sprint-Nextel Patent Suit

One major patent-infringement settlement down; one more to go.

Vonage announced Monday that it has come to an US$80 million settlement agreement with Sprint Nextel to resolve a long-running patent dispute. Under terms of the settlement, Vonage is to pay Sprint Nextel $40 million for a fully paid future license to use its voice-over-packet (VoP) services portfolio. Vonage also agreed to pay $35 million for past use of the VoP license, and $5 million in prepayment of services.

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

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

The companies' settlement comes nearly two weeks after a Kansas jury found Vonage guilty of infringing on six Sprint-Nextel patents and awarded Sprint $69.5 million in damages. Over the past two years, Vonage has also faced a patent suit from Verizon that alleged that Vonage violated seven of its patents.

Earlier this year, a federal jury found that Vonage violated three of Verizon's patents and awarded Verizon $58 million. After appealing that case, the company was recently dealt another blow after an appeals court affirmed the earlier guilty verdict for two of the three patents.