Vonage Receives a Temporary Reprieve, But Will It Matter?

VOIP provider Vonage yesterday received a temporary stay of a court order prohibiting it from adding new customers while its appeal of an adverse ruling in its patent dispute with Verizon. The United States Court of Appeals for the Federal Circuit granted the temporary stay, which is effective until the court can rule on Vonage’s request for a permanent stay. As noted in a previous post, Vonage was found by a federal jury to have violated several of Verizon’s VOIP patents in a ruling that puts at risk the future viability of Vonage’s business. Had Vonage not obtained the stay (and if the temporary stay is later vacated) its business prospects will take a severe hit, but it might not matter in the end. I would wager that there is a substantial likelihood that Vonage’s customers will start to jump ship in ever increasing numbers, as most will simply not be willing to live with the risk that their service could be shut off, and there is zero chance that the federal government will intervene to protect Vonage. All in all, while the temporary stay is a tactical victory for Vonage, its strategic position is still perilous and getting worse.

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