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Vonage gets temporary injunction, stays open

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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.

18 Responses to “Vonage gets temporary injunction, stays open”

  1. I’m not using the vonage application.I have been using skype s/w for a while and its fantastic.It’s a s/w u need to install in ur PC & can make calls from skype-skype users for a lower rate,send instant messages,video calls r for free,&the package includes 12 months of unlimited calls to US and Canada for $29.95.So grab this opportunity and try out skype.If u want to know about skype visit http://www.skype.com.

  2. Of course they got an injunction… lol if this goes through can you imagine the implications its basically shutting down a pretty large telephone service… I mean their are people that vonage is their only phone line. We’re talking millions of people here

  3. Berninger’s comment may be true, but it comes back to churn and whether Vonage will have any customer left even IF it were to ultimately prevail. You have to assume that Vonage’s already-high churn rates will jump by a factor of 2 or even 4. Assuming straight-line line losses from current levels, it is conceivable that the company could run out of subscribers before the end of this year.

  4. what kind of “work around” could they be working on. the only thinkg i can think of is instead of running over a data connection – they run thru a local number. just way that the calling cards or Globe Dialer do it for mobile phones (www.globedialer.com)

  5. Dear Readers,

    Like it was said once before in the comments section of Gigaom in 2005, Carlos Bhola was right; Vonage couldn’t make it without significant wireless or MSO partners.

    The only profit left in Vonage at this point are the rights to the book and movie. What a fun book it will be to read when it comes out.

     Dave
    
  6. Ok Om, now that the judge has barred Vonage from signing new customers, it’s high time to figure out exactly what is in the claims of the patents that Vonage is allegedly infringing.

    Are the claims related to the fact that Vonage is a “bring your own broadband” type VoIP service provider?

    In that case, would it be possible to circumvent the claims if Vonage changed its business model to be a combined broadband/VoIP supplier that routes all calls over its own network up to and including the PSTN interface? I could see that being possible by seeking a merger with someone like Covad, but we need real reporters to go out and get the real
    details, PLEASE