Vonage, the largest independent VoIP vendor in the US, was ordered by a federal jury to pay Sprint $69.5m late last month for patent infringement.
At the time, Holmdel, New Jersey-based Vonage denied any wrongdoing and said it would appeal the verdict and develop workarounds to Sprint’s patents.
The lawsuit was originally filed by Sprint in 2005 and alleged that the technology Vonage used to connect VoIP calls infringed on seven of its patents. On September 25, a jury found it infringed on six of those patents. However, Vonage had said it technology differed from that of Sprint’s patents.
In a short statement issued yesterday, Vonage made no mention of whether it agreed with Sprint’s – and the jury’s – assertions. We are pleased to resolve our dispute with Sprint and enter into a productive future relationship, said Vonage general counsel Sharon O’Leary in both Vonage’s and Sprint’s prepared statements.
She also said, in Vonage’s statement, 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.
As part of the settlement deal, Holmdel, New Jersey-based Vonage will pay Sprint $35m for use of the contested technology to date and $45 for a license for future use. An additional $5m was included as prepayment for services.
Our View
It remains to be seen whether Vonage can stem a recent tide of customer defections with its new marketing campaign. In the meantime, despite big settlements like the one with Sprint, the company has enough money to stay afloat. That is, at least for the time being.
Vonage had about $344m in cash at the end of June, according to its most recent earnings report. It also reported having about $253m in debt.
It is also facing a potential pay out over a separate patent-infringement suit filed against it by Verizon Communications. In March, another federal jury ruled it violated three Verizon patents that relate to voicemail and handing off VoIP calls to traditional phone networks. Vonage was ordered to pay $58m in damages to Verizon, as well as hefty royalty fees. Vonage has appealed the ruling.
