• Reuters, Monday, March 26, 2007 10:34 AM

Things got worse for Vonage Holdings Corp. on Friday after a federal judge issued an injunction, barring the VoIP provider from using Internet phone technology patented by Verizon Communications. U.S. District Judge Claude Hilton agreed that Verizon would suffer harm if he allowed the Internet phone company to continue using its patented VoiP technologies. The judge will delay signing the order for two weeks, giving Vonage time to convince him to delay it indefinitely as the company seeks to have the whole patent infringement case overturned.

Vonage told its customers that it wouldn't experience service interruptions, but the stock still plummeted 26 percent following the news on Friday. Since its initial public offering in May of last year, the company's stock has fallen from $17 to $3 per share on the New York Stock Exchange.

Is this the beginning (or end) for the VoIP provider? Vonage, after all, is in a position not dissimilar to TiVo, offering a technology-based service that its bigger telecom cousins now also provide, although Vonage's situation is exacerbated by the fact that a jury recently found that the company had infringed on three patents owned by Verizon, and must now pay the telecom giant $58 million in damages, plus 5.5 percent in royalties in future. Analysts told Reuters an injunction would present "enormous business difficulties" for Vonage.

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