By Peter Kaplan
> A federal judge dealt a blow to Vonage Holdings Corp. that sent its
> stock reeling on Friday, when he agreed to bar the company from
> usingInternet phonecall technology patented by Verizon
> Communications Inc.
> Vonage said it was confident its customers would not experience
> service interruptions, but investors sent its shares down nearly 26 > percent.
> U.S. District Judge Claude Hilton said he would delay signing the
> order for two weeks to give Vonage time to try to convince him to stay
> the injunction while it appeals the entire patent infringement
> case. "I will sign the injunction at the time I rule on the stay,"
> Hilton said at a hearing.
> Hilton agreed with Verizon that it would suffer irreparable harm if he
> allowed continued infringement of the Voice-over-Internet Protocol
> (VoIP) technologies that allow consumers to make calls over the Internet.
> He rejected arguments by Vonage that the harm to Verizon, the No. 2
> U.S. telephone company, was outweighed by other factors, including
> the public interest.
> "I don't think it's going to kill Vonage," said Albert Lin, an analyst
> at American Technology Research. But he said the legal costs and
> management distractions were disruptive.
> Vonage has been public for less than a year, and its stock has lost
> value consistently since its initial public offering at $17 a share in
> May. It reached a new low Friday, closing down $1.05 at $3 per share
> on the New York Stock Exchange.
> Vonage said the patent battle was far from over and the company would
> vigorously defend itself.
> "Despite this obvious attempt by Verizon to cripple Vonage, the
> litigation will not stop Vonage from continuing to provide quality
> VoIP service to our millions of customers," Vonage chief executive
> Mike Snyder said in a statement.
> OPERATING CHALLENGES
> Vonage has previously said it is working on redesigned technologies to
> avoid infringing Verizon's patents.
> "It should likely continue as an independent company, but their
> operating challenges will have increased," said Stanford Group analyst
> Clayton Moran, who also warned that Vonage's subscriber growth could > slow.
> A jury on March 8 found Vonage had infringed three patents owned by
> Verizon. The jury said Vonage must pay $58 million plus 5.5 percent
> royalties on future sales.
> "They could not have been commercially successful if they had not
> taken these patents we have and put them into their technologies," Dan
> Webb, an attorney for Verizon, said at Friday's hearing on the
> injunction request.
> Webb also cited documents Vonage filed with the court under seal,
> saying an injunction would cause "enormous business difficulties" for
> Vonage. Webb said the Vonage filings suggested that Vonage "can't
> live with an injunction because of the way their technology is
> designed."
> Vonage's chief lawyer, Sharon O'Leary, declined to comment on the > sealed documents.
> "We will get the stay, either through the district court or the
> Federal Circuit Court of Appeals," O'Leary told Reuters outside the > court.
> One patent lawyer told Reuters that Vonage has a chance of winning an
> appeal, but it was crucial to get a stay of the injunction.
> "A one-and-a-half to two-year injunction, even if they win on appeal,
> could be very significant to Vonage," said John Rabena, a partner with
> the firm Sughrue Mion.
> (Additional reporting by Ritsuko Ando in New York)
> Copyright 2007 Reuters Limited.
Another reason to sign up with ViaTalk.
Thanks,
Thomas
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