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Vonage Gets Temporary Reprieve on Ruling

Vonage Holdings late Friday won a temporary stay from a federal appeals court allowing the Internet-phone company to continue signing up new customers pending its appeal of an earlier ruling that a Vonage lawyer said would have amounted to "cutting off oxygen" to the company.

In a patent-infringement case brought by Verizon Communications against Vonage, a federal judge Friday morning ruled that Vonage may continue to service its existing 2.2 million customers but that it wouldn't be allowed to sign up new ones.Vonage immediately filed an emergency appeal to the U.S. Court of Appeals for the Federal Circuit in Washington, D.C., which granted a temporary stay of the judge's order.

Last month, Judge Claude Hilton of the U.S. District Court for the Eastern District of Virginia barred Vonage from using three voice-over-Internet-protocol patents held by Verizon, including one covering the ability of an Internet-based VoIP system to interact with the public switched telephone network. His ruling Friday -- which was to have taken effect April 12, revised the injunction to bar Vonage only from using the technology for future customers..

Vonage lawyer Roger Warin said the ruling would be almost as devastating to the company as cutting off service to all customers, AP reported. "It's the difference of cutting off oxygen, as opposed to the bullet in the head," he said, according to AP.

Previously, a jury in the case ruled that Vonage must pay Verizon $58 million in damages plus a percentage of future revenues for infringing on the Verizon patents. In its lawsuit, filed in June 2006, Verizon had been seeking $197 million.

Industry experts have said that cable operators’ VoIP services don’t employ the Verizon patents in question because cable phone services do not traverse the public Internet as Vonage’s does.

And at least one cabler is aiming to poach Vonage customers out of the uncertainty stirred up by the case: Charter Communications said earlier this week that it will provide free same- or next-day installation of its VoIP service to all current Vonage customers.