Vonage Settles Verizon Suit

Vonage Holdings has settled its patent dispute with Verizon Communications, announcing Thursday that it will pay the phone company between $80 million and $120 million depending on a decision by a federal appeals court about whether to rehear part of the case.

The deal apparently puts closure on a second patent-infringement suit targeting Vonage, after the Internet voice provider settled with Sprint Nextel for $80 million earlier this month.

Meanwhile, AT&T filed a copyright-infringement suit against Vonage alleging the smaller company infringes on the telco’s U.S. Patent No. 6,487,200, titled “Packet telephone system.”

The terms of the resolution between Vonage and Verizon depend on whether the U.S. Court of Appeals decides to grant Vonage's request for rehearing regarding the court's ruling upholding a lower court's decision that Vonage infringed two Verizon patents.

Vonage said that if it wins rehearing on either of the Verizon patents -- 6,104,711 and 6,282,574 -- or if the injunction is vacated as to the two patents, Vonage will pay Verizon $80 million. If Vonage does not win rehearing on either patent, or if the stay is lifted reinstating the injunction, Vonage will pay $120 million, which includes $2.5 million payable to certain charities.

“We’re pleased to put this dispute behind us and believe this settlement is in the best interests of Vonage and its customers,” Vonage chief legal officer Sharon O’Leary said, in a statement.