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Vonage Wins Permanent Stay, Prepares for June 25 Hearing

Vonage Holdings Corp. is breathing a sigh of relief today as a federal appeals court said the embattled IP telephony provider may continue adding new subscribers.

This was perhaps the best news Vonage has received in a while, and its stocks rose 38.4 percent in response, reaching $4 per share.

Vonage in early March lost a patent infringement suit brought by Verizon Communications Inc. On March 23, the trial court judge barred Vonage from adding new customers. Hours later, however, the appeals court granted an emergency stay of that injunction and on Tuesday it issued a permanent stay.

In the midst of all of that and after losing its CEO Vonage said in its delayed annual report last week that it could go bankrupt if it continues to experience repercussions from losing the case. Today, though, executives said the company has enough cash to keep paying quarterly royalties of 5.5 percent and post the $66 million bond required by the court.

That money is intended to cover Verizons lost profits from the continued infringement on its patents.

Vonage did not immediately return an interview request regarding the apparent disparity in financial information.

Now Vonage and Verizon must prepare for oral arguments on June 25. That is the day the Federal Circuit Court of Appeals will hear both sides rationale regarding Vonages request for a new trial.

Sharon O’Leary, Vonage’s executive vice president, chief legal officer and secretary, said Vonage is highly confident in the strength of its appeal.

“We believe the original verdict was based on an erroneous claim construction meaning the patents in this case were defined in an overly broad and legally unprecedented way,” O’Leary said in a news release.

Verizon praised the short timeline set by the appeals court for the hearing and said it expects the jury’s verdict to be upheld.

“The expedited schedule will accomplish the same thing that a partial stay of the injunction pending a longer appeal would have accomplished limiting Vonage’s infringement during the appeal,” said John Thorne, Verizon senior vice president and deputy general counsel. ”An appeal could have taken a year or longer; now it will be argued in just two months.”

Verizon Communications Inc. www.verizon.com  

Vonage Holdings Corp. www.vonage.com


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