Vonage settles patent dispute with Verizon for up to $120m

The precise amount of Vonage's final payout to Verizon depends on whether the federal appeals court grants a rehearing requested by Vonage on the two central patents.

If Vonage wins a rehearing on either of the two patent disputes, or if the injunction is vacated, Vonage will pay Verizon $80m. If Vonage does not win rehearing on either patent, or if the stay is lifted reinstating the injunction, Vonage will pay $120m, which includes $2.5m payable to certain charities.

Vonage’s Chief Legal Officer has stated that the company is pleased to put this dispute behind it, and believes the settlement is in the best interests of Vonage and its customers. The company considers that the settlement removes the uncertainty of legal reviews and long-term court action and allows it to continue focusing on its core business and customers.

It is believed by industry analysts that the lawsuit, along with two filed by other phone companies, has cast a shadow over the future of Vonage.

In addition to the Verizon deal, Vonage has now settled patent disputes in recent weeks with Sprint Nextel for $80m and Klausner Technologies, a privately held company that specialises in voice-messaging technology, for an undisclosed amount.

The company now faces a new patent infringement suit from AT&T, which alleges that Vonage wilfully infringed an AT&T patent related to telephone systems that allow people to make VoIP calls using standard telephone devices.