JERSEY CITY, N.J. - Vonage Holdings Inc. and Nortel Networks Corp. have settled their patent litigation, allowing for cross-licensing of the telecom companies' technology.
The agreement does not call for any payments by either company.
The settlement involves a limited cross-license to three Nortel and three Vonage patents, and dismisses claims relating to past damages and the remaining patents. The settlement is subject to final documentation.
Shares of Vonage rose 11 cents, or 5.5 percent, to $2.11 in morning trading. Shares of Nortel climbed 11 cents to $15.35.
Under the agreement, Toronto-based Nortel and Holmdel, N.J.-based Vonage will cross-license each others' technology, which is used to make emergency calls and dial 411. Vonage won't have to pay Nortel for any alleged unauthorized use of its technology.
"We are pleased to resolve this issue and enter into a productive relationship with Nortel," said Vonage Chief Legal Officer Sharon O'Leary.
This year, Vonage agreed to settle four other patent suits, and in each case, promised to pay the other side for prior use of its products.
Earlier this month, it agreed to pay AT&T Corp. $39 million as part of a settlement. Vonage also has said it will pay Sprint Nextel Corp. and Verizon Communications Inc. a total of $200 million to settle lawsuits.
Vonage spokesman Charles Sahner said earlier this month that the company was dragged into the legal battle with Nortel after it acquired three patents from Digital Packet Licensing last year. DPL had filed a suit against Nortel in 2004 alleging violation of those three patents, so Vonage continued with the lawsuit. Nortel countersued, claiming Vonage violated 13 of Nortel's patents, and asked that Vonage be kept from using the technology.
Despite having now settled all of its legal battles, Vonage still faces many challenges as cable companies roll out their own digital phone services and consumers increasingly opt for cell phones in place of landlines.
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Ben Charny contributed to this article.
