by Mike Masnick
Mon, Oct 8th 2007 11:34am
Just a couple weeks after losing yet another patent lawsuit, Vonage has decided to settle its patent lawsuit with Sprint, agreeing to pay $80 million, covering both past and future licensing costs. The company is still fighting over Verizon's questionable patents. Again, it seems pretty silly that the company that actually figured out how to bring phone-based VoIP to the market in a way that people wanted now has to pay the incumbents who were unable (or unwilling) to do so. Of course, there's also been lots of talk that these patent lawsuits were really an attempt by the telcos to crush Vonage to the point where it was an easy buyout target. Thus, settling with Sprint, could open up the possibility of a Sprint purchase... but it probably would have just made more sense to do the buyout first before "settling," as the news of the settlement has sent Vonage's stock soaring. Based on that, don't be too surprised if Vonage reaches a bit deeper into its dwindling cash reserves to to pay off Verizon as well -- the resulting stock bump could effectively pay for the licensing fees. All in all, though, it does highlight how silly the patent system has become. The uncertainty over the suits hurts a company's stock and pushes companies to settle, even if they shouldn't. That's exactly what happened with RIM and NTP, and it looks like what happened here.
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