Vonage to Pay AT&T $39M to Settle Patent Suit

But Net Phone Company Still Faces Legal Action from Nortel

By Todd Spangler -- Multichannel News, 12/22/2007 6:00:00 AM

Vonage Holdings announced Friday that it reached a definitive agreement settling AT&T's patent lawsuit against the Internet phone company, under which Vonage will pay the telco giant $39 million over five years.

The companies had agreed in principle to a settlement on Nov. 7. AT&T filed suit against Vonage Oct. 17, alleging Vonage infringed on U.S. Patent No. 6,487,200, titled “Packet Telephone System.”

Vonage -- which has been fighting off patent attorneys for more than a year and a half -- in October settled lawsuits with Verizon for up to $120 million and Sprint Nextel for $80 million.

But it's not out of the courts yet. Nortel Networks last week claimed in a lawsuit that Vonage violates nine patents related to Internet phone service and features such as 911 calling and "click-to-call." Nortel said the lawsuit countered Vonage's claims that Nortel had violated three of its patents, AP reported.

Vonage acquired three patents from Digital Packet Licensing last year, and DPL had filed a suit against Nortel in 2004 alleging violation of those three patents.