With a ban on new subscribers looming, the ailing telecom is under pressure to find creative new ways of doing businessVonage attorney Roger Warin didn't exactly inspire confidence when he responded to a judge's ruling that bars the company from signing up new customers: "It's the difference of cutting off oxygen as opposed to the bullet in the head," Warin said on Apr. 6, after U.S. District Court Judge Claude Hilton for the Eastern District of Virginia signed the injunction, effective Apr. 12.
The ruling came about a month after a jury said Vonage infringed on Internet calling patents held by Verizon Communications (VZ); Vonage appealed the Apr. 6 decision. But just as living things don't last long without air, Vonage (VG) won't achieve much growth without new subscribers. So that same day, another judge of the same court granted Vonage an emergency, temporary stay to sign up new customers pending a hearing for a permanent stay. "In terms of our business there is no change," says Vonage spokesperson Brooke Schulz.
That hearing hasn't been scheduled but is likely to happen in the next month. A decision to uphold Hilton's ruling, however, would only step up pressure on Vonage to find a way to keep operating without using Verizon's technology, through a so-called work-around. "This will be a challenge in light of the fact that the judge construed the scope of Verizon's patents broadly," analysts at Stifel Nicolaus wrote in an Apr. 6 research note.
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