Vonage gets temporary injunction, stays open

von_5977_55577.JPEGUpdated: Vonage has been granted a temporary stay from U.S. Court of Appeals for the Federal Circuit in Washington, DC, the company said. The company is now able to continue signing up new customers. Earlier today a lower court passed an order that effectively prevented Vonage from signing up new customers.

The stay enables Vonage to continue to sign up new customers until the Appellate court can hear Vonage’s request for a permanent stay. The Court’s ruling allows Vonage to continue to provide phone service to existing customers.

Earlier today the U.S. District Court in Alexandria, Va. indicated it would enter an injunction against Vonage effective April 12, 2007 in connection with certain Verizon technology on which it was found to be infringing.

The Court indicated that Vonage would be barred from acquiring new customers during its appeal to the U.S. Court of Appeals for the Federal Circuit in Washington, D.C. In response, Vonage filed for and received an emergency stay of the injunction from the Federal Circuit. [Press Release]

Judge Claude Hilton has issued an injunction that bars Vonage from signing up new customers. Vonage, as you know had lost its patent infringement case with Verizon and has been left twisting in the wind. While not exactly as dire as say, the shut down of the service, Judge’s decision is still a pretty hefty blow to the company.

“It’s the difference of cutting off oxygen as opposed to the bullet in the head,” Vonage lawyer Roger Warin told the Associated Press. Still the 2.2 million Vonage customers can breathe a sigh of relief – their phone service is not going to be turned off this weekend. It is more along the lines of targeted stay envisioned by Verizon. Daniel Berninger, senior analyst with Tier1 Research counters the sky-is-falling conventional wisdom and says that the “due process allows Vonage to make its case before other judges and courts. Vonage has sufficient cash reserves ($500 million) to survive years of legal dispute with Verizon.

Berninger points out that “There exist no patents on the core innovation of “VoIP”. All patents
address features and approaches to implementation. Vonage remains viable unless Verizon has a patent on the Internet and Verizon’s patent claims remain vulnerable in the appeal process.” Vonage is trading down 6.7% at about $3.37 a share.

Click here for Our previous Vonage-Verizon patent dispute coverage.