U.S. Appeals Court Stays Patent Injunction; Puts Vonage on Life Support

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U.S. Appeals Court Stays Patent Injunction; Puts Vonage on Life Support

6:33 pm on April 6, 2007 | Category: Business, VoIP, Law

A U.S. federal appeals court temporarily stayed an injunction against broadband phone provider, Vonage, this evening, after a lower court judge banned the company from advertising its services or signing up any new customers earlier in the day.

The injunction came as a result of a successful parent infringement lawsuit brought against the VoIP startup by incumbent telecom operator, Verizon Communications. Verizon won a $58 million settlement last month, as well as 5.5% royalties on Vonage’s future revenues.

Today’s injunction, which was quickly put on hold by the higher court, would have been almost as devastating as a total ban of Vonage services, according to Roger Warin, a lawyer representing the VoIP startup.

“It’s the difference of cutting off oxygen as opposed to the bullet in the head,” Warin explained.

Vonage is planning appeal the damming injunction, which could come into effect at any time if the emergency stay is lifted. The VoIP provider claims that Verizon is overstating the importance of the patents in question, and that there remains a “strong likelihood” of the injunction being overturned.

For the moment, however, it’s impossible to deny that Vonage is on life support, with few places left to turn. Until when and if this issue is fully resolved, will the company ever be able to get back to business as usual.