Vonage Holdings Corp. on Friday won a temporary stay of a federal judge’s ruling that it can continue operating but cannot recruit new customers during its patent dispute with Verizon Communications Inc. The U.S. district court judge had earlier barred VoIP phone service provider Vonage from signing up new customers after the company lost a patent infringement lawsuit to Verizon Communications. The court ruled that the company could continue to serve its existing 2.2 million customers.
Last month, a jury found that Vonage’s VoIP phone system had infringed three patents held by telecommunications giant Verizon Communications. The federal judge said he would issue an injunction forcing Vonage to stop using the patented technologies. The order also requires the popular VoIP company to put up a $66 million dollar bond. The court also charged Vonage $58 million in damages plus royalties.
The temporary stay provides beleaguered Vonage and its 2.2 million customers some breathing room. The company’s lawyer Roger Warin had argued in court that the injunction would serve to strangle the company. Verizon asserted an injunction against Vonage was an appropriate measure. However, despite the temporary stay, serious questions continue to hover over the fledgling company, the first independent Internet telephone venture to go public last year.
The second-biggest U.S. telephone company, Verizon, had opposed any stay of the March ruling. The New York-based company contended that if a stay was granted, that it be partial, blocking Vonage from signing up new customers during the appeal. Verizon had accused Vonage for luring away 600,000 customers by copying technology such as voice-mail features, as well as the method for allowing Internet calls to reach traditional phone lines.
Analysts believe that the Vonage’s business could face problems if the company could not add new customers while appealing the case and termed the temporary stay as ‘unnecessary technically’.
