Judge Bars Vonage From Signing New Subs

A federal judge has barred Vonage Holdings Corp. from signing up new subscribers because it infringed on three Verizon Communications Inc. patents.

Vonage plans to immediately appeal the ruling.

U.S. District Judge Claude Hilton on Friday told Vonage he would hold the injunction against the company as punishment for the infringement. The Associated Press reported that Vonage’s lawyers said the compromise injunction is almost as devastating as one that would have affected Vonage’s 2.2 million existing customers.

The compromise reportedly came from Verizon’s lawyers in an effort to save Vonage from shutting down its entire network.

A jury on March 23 ordered Vonage to pay $58 million to Verizon, plus 5.5 percent royalty fees on all of its future revenue. Hilton then issued the injunction permanently barring Vonage from using Verizon’s patented technology.

The night before the judges anticipated ruling, Vonage once again  halted trading of its stock. Shares closed at $3.37 each, down 25 cents, and down from a 52-week high of $17.25.

Vonage on April 5 also told the Securities and Exchange Commission it had lost a director, but not as a result of any disagreement with the company. Betsy S. Atkins resigned on March 30. Further, in a court filing on April 4, the company said that if an injunction were implemented, “virtually all” customers would leave for another IP telephony provider.

Verizon Communications Inc.  

Vonage Holdings Corp.

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