Vonage Settles Verizon Patent Suit

With the recent security issues and patent infringement suit with AT&T, internet phone company Vonage needs all the good news it can get. The company announced today that it has settled a patent lawsuit brought by Verizon Communications Inc. for a maximum of $120 million, though the exact amount of damages will not be decided until a rehearing takes place. Previously, Vonage had placed $88 million in escrow after a jury held that the company had infringed on three patents and awarded Verizon $58 million in damages, plus a royalty on future revenues. A court appointed escrow agent would distribute the money in the account as required. However, the new settlement seems to eliminate the royalty on future revenues and places a cap of $32 million in additional damages on top of the $88 million, leading to a maximum of $120 million in payouts.

"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," said Sharon O'Leary, Vonage's chief legal officer. If Vonage wins a rehearing on either of the two patents at issue, its total payout will be only $80 million.

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