Communication Solutions

Vonage (News - Alert) and Nortel have announced their agreement to end their pending litigation. The settlement involves a limited cross license to three Nortel and three Vonage patents—all of which had been in dispute. There will be no monetary payments. Any claims from past damages and the remaining nine disputed patents will be dismissed pending final documentation. The technology in question is used to make emergency calls or dial 411.

 

Nortel (News - Alert) had filed a lawsuit against Vonage earlier this month, alleging that Vonage had violated nine of Nortel’s patents related to Internet telephony. The allegations countered Vonage's own claims that Nortel had violated three of Vonage’s patents. Shares of Vonage, which closed Friday at $2, were up about 9% in premarket trading on Monday.

"We are pleased to resolve this issue and enter into a productive relationship with Nortel," said Sharon O’Leary, Vonage’s Chief Legal Officer.

 

Vonage agreed to settle four other patent suits in 2007, and promised to pay the other side money for prior use of its products in each case. For example, earlier this month, it agreed to pay AT&T $39 million, and also agreed to pay Sprint (News - Alert) Nextel and Verizon a grand total of $200 million.

 

Vonage found itself in a legal battle with Nortel after acquiring three patents from Digital Packet Licensing last year. DPL had already filed suit against Nortel three years ago, alleging violation of those three patents. Vonage continued with the already-existent lawsuit. Nortel countersued, claiming Vonage was violating 13 of its patents. Nortel also asked that Vonage be prohibited from using the technology.

 

Despite the settlement all of its legal woes, Vonage faces the issue of cable companies introducing their own digital phone services, as well as consumers’ increasing move towards cell phones in favor of landlines.

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