Finally, a ray of good news for embattled but pugnacious VoIP provider Vonage: the Holmdel, NJ-based voice provider announced this morning it has settled its patent dispute with Sprint by entering into a licensing deal under which it will get to use Sprint's VoIP patent portfolio.
In late-September, a jury found that Vonage had infringed upon Sprint's patents and ordered Vonage to pay Sprint $69.5 million in damages plus 5% royalty on future revenue. The settlement is valued at $80 million, according to the companies, with Vonage paying $35 million for past use of license, $40 million for a fully paid future license, and $5 million in prepayment for services.
Although Vonage is seemingly paying a bigger price tag than what the jury verdict required, it's getting out from under the dark cloud of costly, protracted litigation and may be saving some dough by agreeing to a lump sum payment instead of 5% of ongoing revenues. Sprint-Nextel, not in a solid financial position itself, is getting an infusion of cash and saving on costly, protracted litigation under the deal.
Investors like the news. Vonage's bottom-scraping stock soared 43% (which is only a $.50 hike) after the announcement.
But, Vonage is still operating under the dark cloud of dealing with Verizon, which won a big victory over the VoIP upstart earlier this year when a jury found that Vonage had infringed upon Verizon's VoIP patents and ordered the company to pay $58 million in damages and 5.5% royalty payment mandate. Although an appeals court recently upheld that verdict, it did remand the case back to a lower court regarding one of the patents in question, so that lawsuit carries on.
Cynthia Brumfield at 10:39 AM|Comments(0)
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