Vonage must pay $120 million to settle its patent dispute with Verizon

A court found Vonage guilty of infringing on three of the five disputed Verizon's patents, last march placing an injunction on the company's use of the patented technology to route Internet calls made over traditional phone lines. Vonage had then filed a petiton for rehearing, regarding two of the disputes. Under the terms of the settlement announced Oct. 25,2007, if Vonage wins a rehearing on either of those patents, then Vonage will pay Verizon $80 million. If Vonage does not win a rehearing, the company has agreed to pay $120 million, including $2.5 million to certain charities.

Now Vonage must pay $120 million to settle its patent dispute with Verizon after a federal court on Thursday denied the Internet phone provider's request to rehear the case. The $120 million total settlement consists of $117.5 million to Verizon and $2.5 million to charities.

Vonage, the leading independent provider of Internet phone service, has 2.5 million customers. Vonage shares slipped 7 cents, or 3.2 percent, to $2.15 in late trading Thursday. The stock remains well below its year high of $7.30 and its initial public offering price of $17 in May 2006. The current stock price reflects lingering concerns about the Holmdel, N.J.-based company, despite the recent patent settlements. Vonage faces broader strategic challenges as cable companies roll out their own digital phone services and consumers increasingly opt for cell phones in lieu of landlines.