ALEXANDRIA, Va. – A judge issued an injunction Friday that would bar Internet phone carrier Vonage (VG) from signing up new customers as punishment for infringing on patents held by Verizon Communications Inc. (VZ) Vonage planned an immediate appeal.
Vonage's lawyers said the compromise injunction posted by U.S. District Court Judge Claude Hilton would be almost as devastating as ordering Vonage to cut off service to its 2.2 million existing customers.
"It's the difference of cutting off oxygen as opposed to the bullet in the head," Vonage lawyer Roger Warin said.
Verizon's lawyers had suggested the compromise injunction as a way to avoid shutting down Vonage's entire network.
Last month, a jury in Alexandria, Va., found that Vonage infringed on three patents held by Verizon. The jury awarded Verizon $58 million plus future royalties of 5.5 percent on revenue obtained through continued use of the infringed patents.
On March 23, judge Hilton went even further, issuing a permanent injunction barring Vonage from further use of the patented technology. He said royalties were insufficient given a competitive climate in which Vonage continues to gain subscribers at Verizon's expense.
In court papers filed Wednesday, Verizon said that if an injunction were implemented, it "would cause virtually all of (Vonage's) customers to leave for another provider."
Vonage officials have said that Verizon overstates the patents' importance and that they have a strong likelihood of overturning the verdict on appeal.