A US district court judge has barred VoIP provider Vonage Holdings from signing up new US customers after the company lost a patent infringement suit to Verizon.
Judge Claude Hilton denied Vonage's request to stay an injunction pending its appeal of a patent infringement ruling. On 8 March, a federal jury found that Vonage infringed three Verizon patents and must pay $58 million in damages plus royalties.
Hilton issued a permanent injunction against Vonage in late March, but delayed its implementation while considering Vonage's request for a stay. Vonage has said it would appeal the injunction to a higher court if it failed with Hilton.
Current customers won't be affected by the injunction, Vonage has said.
A Vonage spokeswoman said that the company was still evaluating Hilton's ruling but Verizon praised Hilton's decision, saying it expected the judge's ruling to be upheld on appeal.
"Judge Hilton exercised the court's equitable discretion to craft a middle path that allows Vonage to continue serving its existing customers while protecting Verizon's patents from increased infringement during the appeal process," said John Thorne, Verizon senior vice president and deputy general counsel.
The ruling creates major questions for Vonage's future, VoIP analysts said.
"It just keeps getting worse and worse for them every week," said Will Stofega, research manager for VOIP services at IDC. "For the judge to rule they can't sign up new customers, that's the whole idea in terms of their strategy."
Vonage has said it has an alternative technology it can use that doesn't use the patents claimed by Verizon. "Now is the time to demonstrate they have it," Stofega said.
With no ability to grow, Vonage's future is in doubt, added Jeff Kagan, an independent telecom analyst. "Vonage was the poster child for the new VoIP technology, but now everyone is a competitor and their importance is limited," he said. "The big question is about the company's survival, not the VoIP technology."
Read Techworld's John Dunn's take on the Vonage/Verizon dispute