Vonage (VG) up 11% After-Hours - Won't Have To Pay Nortel To Settle Patent Spat

http://money.cnn.com/news/newsfeeds/articles/djf500/200712281818DOWJONESDJONLINE000610_FORTUNE5.htm

SAN FRANCISCO -(Dow Jones)- Internet phone service provider Vonage Holdings Corp. (VG) and Nortel Networks Corp. (NT) are close to settling their patent spat, and under terms more favorable to Vonage than in other patent cases it settled this year.

A source familiar with the matter said Vonage and Nortel will cross-license each others' technology, which is used to make emergency calls or dial 411. Meanwhile, Vonage won't have to pay Nortel anything for any alleged unauthorized use of its technology.

A settlement is "very close," and, in fact, may have been signed already, the source said.

A Nortel spokesman couldn't be reached for comment Friday. Vonage spokesman Charles Sahner said "we are working with Nortel towards an amicable resolution; we are close to a settlement."

This year, Vonage agreed to settle four other patent suits, and in each case, promised to pay the other side money for prior use of its products.

Last week, it agreed to pay AT&T Corp. (T) $39 million as part of its settlement. Vonage has also agreed to pay Sprint Nextel Corp. (S) and Verizon Communications Inc. (VZ) a total of $200 million to settle their respective lawsuits.

Vonage sued Nortel in August, claiming three patents Nortel held were mistakenly granted to the company. Nortel counter-sued, claiming Vonage is violating a total of 13 of Nortel's patents, and asked that Vonage be kept from using the technology.