Vonage Holdings Corporation (NYSE:VG) shares rose more than ten percent today after the company announced that it has settled its patent dispute with Nortel Networks without paying any money out of pocket. Investors have been concerned for some time that the VOIP provider may be forced into bankruptcy if it was ordered to pay hefty fines to old-telecom companies that it walked over. Shareholders applauded the move as it marks one of the final lawsuits hovering over the company.

The new settlement involves a limited cross license to three Nortel and three Vonage patents and dismisses claims relating to past damages and remaining patents. Vonage was initially dragged into this lawsuit after it acquired Digital Packet Licensing, which was suing Nortel at the time for the violation of three patents. Vonage continued the lawsuit before it was countersued by Nortel, who claimed that Vonage was violating 13 of its own patents and asked that the VOIP provider be shut down and kept from using the technology.

This settlement is a great deal compared to Vonage’s settlements in four other patent lawsuits where it was forced to pay the other side money for prior use of its product. These lawsuits sent Vonage shares tumbling amid worries that they would be forced to shut down their service because they were in violation of basic patents on the technology itself. However, these were all resolved in exchange for cash, where AT&T received $39 million while Sprint and Verizon received a total of $200 million.

In the end, this is good news for Vonage who now appears to be cleared of outstanding lawsuits that threatened to send them into bankruptcy. Shareholders are hoping that the company can now turn itself around and focus on building revenues and profitability. Combined, these factors make VG a stock worth watching closely!

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