Vonage, AT&T Near Patent Suit Deal

Vonage said Thursday that it had reached “an agreement
in principle” with AT&T to settle the patent-infringement lawsuit
filed by the telecommunications company.

According to Vonage, the terms of the deal under discussion
include a payment by Vonage of $39 million over five years in
exchange for AT&T dropping its suit. Vonage would also drop its own
suit against AT&T.

“We’re moving in the right direction with regard to AT&T and are
focused on finalizing our agreement by the end of this month,” said Vonage spokesman Charles Sahner. “We would like to be able to put AT&T behind us together with Verizon, Sprint and our other recent settlements.”

AT&T spokesman Michael Coe would only confirm that AT&T is in discussions with Vonage, as it has been for the last two-and-a-half years.

Vonage said in a statement that if negotiations of a definitive settlement
agreement fail, then it will “vigorously defend itself in
this matter.

The AT&T suit is the final intellectual property suit Vonage faces. Last month, Vonage settled its patent infringement case with Verizon, agreeing to pay up to $120 million if necessary.

And just before the Verizon settlement, Vonage settled with Sprint Nextel for $80 million. The good thing about this settlement is that it allows Vonage to avoid paying 5 percent of its future sales to Sprint, as had been stipulated in the original Sept. 25 federal jury ruling.

Vonage’s legal woes factored heavily in its financial
statement issued today, in which the company reported a $161.7
million loss — including $132 million in charges due to legal
settlements.

“The company’s cash requirements in the fourth quarter
increased due to the release of $78 million of restricted cash to
Verizon, an additional $2 million to Verizon, $40 million placed into
escrow and reported as current restricted cash until the Verizon
appeal is decided, $80 million to Sprint and $2 million in other IP
litigation settlements,” the company said in its statement.