Vonage Settles Patent Lawsuit with Verizon Communications

11:30 pm on October 27, 2007 | Category: Business, VoIP, Telecom Services, Law

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Troubled VoIP provider, Vonage Holdings Corp., announced late on Thursday that it had settled a highly-publicized patent conflict with Verizon Communications for a maximum penalty of $120 million.

The Verizon lawsuit, among other intellectual property conflicts, has cast serious doubt on Vonage’s future, not to mention its stock price, which declined more than 90% in its first seventeen months of trading. This settlement, however, seems to have given a glimmer of hope to Vonage shareholders, causing the stock to jump 70% in after-hours trading Thursday.

“We believe that the settlement terms may allow Vonage to avoid bankruptcy — at least for now,” said a Stifel Nicolaus telecom analyst in a research note after the settlement was announced. Vonage also settled a similar patent suit with wireless giant, Sprint Nextel, earlier this month.

“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,” commented Vonage’s chief legal officer, Sharon O’Leary.

The VoIP pioneer’s legal problems are far from over, however, especially now that America’s top telecom incumbent, AT&T Inc., has filed its own patent action against the company.

“There’s always something coming out of the woodwork in terms of lawsuits,” said TeleGeography Research analyst, Stephan Beckert, noting that Sprint’s and Verizon’s success suing Vonage will encourage AT&T to press the matter. “That probably says more about the patent system than it does about Vonage.”

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    Published by TeleClick Enterprises
    Edited by Jeremy Maddock