Vonage hit with injunction in Verizon case

VoIP pioneer Vonage received another blow this week when the U.S. District Court in Alexandria, Va., issued an order enjoining Vonage from using certain VoIP technology named in its patent litigation with Verizon.

The order is not immediately effective, however, and Vonage says it is confident its customers will see no change in their phone service. The court announced its intent to hear a stay argument in two weeks, at which time it will render a decision regarding the stay, as well as making the injunction effective.

Two weeks ago, the federal court ruled that Vonage infringed on three Verizon patents and ordered the company to pay Verizon $58 million in damages, plus 5.5% royalty rates for future use of Verizon technology in a suit brought against Vonage in June 2006. Vonage said it would appeal the ruling.

Sprint also is suing Vonage for patent infringement. That trial is expected to start in September.

The company’s net losses in 2005 were $261 million and rose to $286 million in 2006. The company’s IPO underwhelmed, with its stock price steadily dropping over the past year from a high of about $14 to the current price of roughly $3.10.

The company, however, has achieved 19 consecutive quarters of double-digit revenue growth, doubled revenues to $607 million in 2006, and added nearly 1 million net subscriber lines last year.

If the court denies the stay, Vonage will seek a stay through appeal from the Federal Court of Appeals. Vonage says it is confident it will be able to obtain a stay through appeal.

“We are confident Vonage customers will not experience service interruptions or other changes as a result of this litigation," said Mike Snyder, Vonage’s CEO, in a statement.

“Our fight is far from over," Snyder stated. “We remain confident that Vonage has not infringed on any of Verizon’s patents — a position we will continue vigorously contending in federal appeals court — and that Vonage will ultimately prevail in this case.

“Despite this obvious attempt by Verizon to cripple Vonage, the litigation will not stop Vonage from continuing to provide quality VoIP service to our millions of customers," Snyder concluded.