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Appeals court stays Vonage injunction blocking new customers

[JURIST] The US Court of Appeals for the Federal Circuit [official website] issued an emergency stay of an federal injunction Friday, hours after US District Judge Claude M. Hilton of the Eastern District of Virgina issued the partial order prohibiting leading Internet phone service Vonage [corporate website] from subscribing new customers. On March 8, a federal jury returned a verdict finding that Vonage had violated [Verizon press release; Vonage press release] three voice-over-Internet Protocol [FCC backgrounder] patents held by Verizon Communications, Inc. [corporate website], awarding Verizon $58 million dollars in compensation plus future royalties amounting to 5.5 percent of Vonage's revenues if Vonage continues to use the patented technology. Hilton issued the partial injunction early Friday, saying it was appropriate to prevent Vonage from using the patented technology to attract more customers away from Verizon. Hilton, stating that he did not wish to irreparably harm Vonage's business, issued the partial injunction as a less severe punishment than one he initially proposed, which would would have disrupted phone service for Vonage's 2.2 million existing customers. Vonage lawyers argued in response that the ruling would "slowly strangle" Vonage because it would be unable to compensate for customers that routinely switch services in the highly competitive industry. Vonage lawyers projected that the phone service would lose approximately 650,000 subscribers over the course of next year.

Verizon has a week to respond to the emergency stay, and the appellate court will decide whether to allow Vonage to continue subscribing new customers. The Washington Post has more. AP has additional coverage.

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