Embattled Internet telephony provider Vonage announced late yesterday that it has settled its patent dispute with Verizon Communications for a maximum of $120 million. The exact amount of payment hinges on an appeals court's decision on Vonage's petition for rehearing regarding two of the disputed patents. If Vonage wins a rehearing on either of those patents, then Vonage will pay Verizon $80 million. If Vonage does not win a rehearing, the company has agreed to pay $120 million, including $2.5 million to certain charities.
A court found Vonage guilty of infringing on three of the five disputed Verizon's patents in the spring, placing an injunction on the company's use of the patented technology to route Internet calls made over traditional phone lines. Vonage won a stay on the injunction and, last month, an appeals court sent the remaining two patents back to court for a retrial.
"We're pleased to put this dispute behind us and believe this settlement is in the best interests of Vonage and its customers," said Sharon O'Leary, Vonage chief legal officer, in a statement. "This settlement removes the uncertainty of legal reviews and long-term court action and allows us to continue focusing on our core business and customers."
But the Verizon settlement wasn't the only legal troubles for Vonage. Earlier this month, Vonage settled two other patent infringement suits, one for $80 million with Sprint Nextel. And last week, AT&T joined the charge and filed a suit against Vonage.
Due to a successful IP last year, the company has substantial funds, but there has still been some question about Vonage's ability to stay in business. The continued legal trouble has scared off customers; part of the court order in the spring ruled that the company acquire no new customers. That put a damper on growth.
But with the Verizon suit mostly settled, Vonage seems ready to move on.
"This settlement removes some of the distraction and uncertainty," Charles Sahner, a spokesman for Vonage, told The New York Times. "Putting this piece behind allows the company to move forward."