Judge Sides With Verizon Over Vonage

A federal judge dealt a serious blow to Vonage last week that sent the company's stock plunging. U.S. District Court Judge Claude Hilton said he would issue a permanent injunction against the VoIP company that will bar it from using patented technology owned by Verizon Communications.

Hilton said the injunction, which followed a jury decision that Vonage had infringed on three Verizon patents, is required because monetary damages do nothing to "prevent continued erosion of the client base of the plaintiff." However, he won't formally enter the injunction for another two weeks, while he considers Vonage's request for a stay of either 120 days or until its appeal is heard at another hearing that was originally scheduled for Friday, April 6.

Vonage has seen its share price fall 80 percent since its initial public offering last year as a result of legal challenges and heightened competition. Vonage tried to reassure customers concerned by the judge's ruling, just as the company did following the jury decision earlier this month.

"We are confident Vonage customers will not experience service interruptions or other changes as a result of this litigation," Vonage Chief Executive Mike Snyder said in a statement released last week following the judges comments.

According to a recent Dow Jones report, Vonage has been vague in describing how an injunction would affect its services, other than it plans to use a technology "workaround" to avoid infringement of the Verizon patents. They also say that It's relatively common in these cases to keep the solutions under wraps until they are required to be used. Vonage filed a legal brief on the issue under seal.

For more information, check out the Smart Money article Judge Sides With Verizon Over Vonage.