ALEXANDRIA, Va. - Internet phone company Vonage Holdings Corp. will be barred from signing up new customers as punishment for infringing on patents held by Verizon Communications Inc., under an injunction ordered Friday.
The injunction was to take effect Thursday, but the company was granted a temporary stay from U.S. Court of Appeals for the Federal Circuit in Washington, D.C., which will allow Vonage to sign up new customers until the court rules on its appeal.
The order issued by U.S. District Court Judge Claude Hilton is less severe than the punishment he initially proposed - a blanket injunction that might have disrupted phone service for all 2.2 million of Vonage's existing customers.
But Vonage's lawyers said the compromise crafted by the judge - at Verizon's suggestion - is almost as devastating.
"It's the difference of cutting off oxygen as opposed to the bullet in the head," Vonage lawyer Roger Warin said.
The injunction comes a month after a jury in Alexandria, Va., found that Vonage infringed on three patents held by Verizon.
The jury awarded Verizon $58 million in compensation for Vonage's past use of the patents, plus future royalties for their continued use.
But the judge later ruled that an injunction of some form was appropriate to prevent Vonage from using the infringed patents to continue to steal customers away from Verizon.