Vonage Can Sell Services During Appeal

By Alan Sipress, Washington Post, April 24, 2007; 3:40 PM
A federal appeals court ruled today that Vonage Holdings, the leading Internet telephone provider, can continue doing business as usual while it seeks to overturn a lower court ruling that it violated three patents belonging to Verizon.
Roger Warin, a lawyer for Vonage, told the appeals court during morning arguments that the company faced a "real risk of insolvency" if barred from selling its service to new customers as the trial court ordered earlier this month. He asked the three-judge panel to extend an emergency reprieve allowing the company to continue adding new customers.
Less than two hours later, the appeals court ruled in favor of Vonage and scheduled a June 25 hearing on the appeal itself.
The decision by the Court of Appeals for the Federal Circuit, a special court established to hear all patent case appeals in the country, marks the latest chapter in Vonage's struggle to survive after a U.S. district court in Alexandria ruled last month that the company could no longer use a crucial technology connecting its online network to the public telephone system. The district court judge had granted Vonage a partial reprieve, saying it could temporarily continue serving existing customers but could not sign up new ones.
While Warin told the appeals court that Vonage's viability was on the line, he added that Verizon could actually benefit if his company were allowed to continue signing up new customers. This because Vonage could have to pay Verizon royalties on the new business under the district court ruling.
In a filing to the Securities and Exchange Commission last week, Vonage said it could face bankruptcy and liquidation if its appeal fails.