Updated: Court Gives Vonage Reprieve on New Customer Ban

Vonage (News - Alert) has received a renewed lease on life, as the U.S. Court of Appeals have given the beleaguered VoIP telephone provider a permanent stay of a previous court injunction that would have barred it from signing up new customers.

 

Confirming an earlier Bloomberg online report, Vonage said in a statement it had won the stay. The company will now be able to continue signing up new customers while the U.S. Court of Appeals hears its case.

 

“We thank the appellate court for its thoughtful consideration of the merits of our case,” said Jeff Citron, Vonage chairman and interim chief executive. “It’s business as usual for us.”

 

It has been anything but business as usual for Vonage for over a month.

 

Earlier this month, a federal judge had ruled Vonage could no longer sign up new customers, but the Court of Appeals granted the company a temporary stay until a final court decision was made. Vonage has been seeking to buy time to present its court appeal in its ongoing patent dispute with Verizon (News - Alert).

 

After a federal jury last month concluded Vonage infringed three patents owned by Verizon and would have to pay $58 million in damages plus future royalties, the VoIP phone company’s fortunes took a turn for the worse, culminating in the resignation of Vonage’s CEO Michael Schneider.

 

But according to reports, the lengthy questioning in the appeals process could be a silver lining for Vonage.

 

According to a CNET online report, the three-judge panel at the U.S. Court of Appeals for the Federal Circuit has reportedly questioned Verizon and Vonage attorneys at length about the district court’s interpretation of the three disputed patents related to VoIP telephone service. Much of the wrath has been directly at Vonage attorney Roger Warin, according to reports.

 

"It's very hard to tell from the briefs what's going on here," Judge Timothy Dyk was quoted as telling Warin shortly after the attorney began his arguments. The onus of proof remains on Vonage to convince judges that a permanent stay to the junction is needed as the VoIP telephone service provider struggles to stay afloat.

 

Warin has reportedly argued the ban on signing new customers was unfair on top of the 5.5 percent royalty Vonage has agreed to pay to Verizon as part of the lower court ruling.

 

A Reuters report quoted one analyst as stating the protracted questioning could be a good sign for Vonage, indicating that judges are interested in hearing what the company has to say.

 

The jury remains out, however, whether Vonage can restore customer and shareholder confidence, and whether it can find a workaround for the patents it has been found to violate.