Vonage settles last of patent infringement cases

The last day of 2007 brought some relief to struggling Internet telephone provider Vonage, as the company settled the last patent infringement lawsuit against it, this time with telecommunications giant Nortel.

AT&T, Verizon and Sprint Nextel had all sued Vonage earlier in the year. Verizon was the first to sue the company, and for a period left Vonage unable to accept new subscribers. In the end, Vonage was forced to pay $80 million each to Verizon and Sprint, while the cost of its AT&T settlement was not yet disclosed.

Nortel was the only remaining litigant, although it's case wasn't related to Vonage directly. A company called Digital Packet Licensing had sued Nortel in 2004, and Vonage acquired the company in 2006. As part of the ongoing case, Nortel filed a counterclaim against Vonage in December.

Digital Packet Licensing had accused Nortel of violating three of its patents. Nortel responded with a claim that Vonage was infringing on nine of its patents, including those related to emergency and information calls, as well as click-to-call functionality.

Like many patent fights, Nortel sued the VoIP provider more out of an attempt to force Vonage's hand at the bargaining table, calling it a "defense" move. And Vonage was likely eager to settle with Nortel so it could have a clean slate going into 2008.

The voice over IP provider has agreed to drop all previous claims against Nortel, and the two companies will cross-license three patents. Unlike with its other plaintiffs, no money will be exchanged as part of the Nortel settlement.