After setback, Vonage wins temporary relief

Update ALEXANDRIA, Va.--A federal appeals court granted Vonage a temporary reprieve late Friday from an injunction granted earlier in the day that would have prevented the Internet phone provider from signing up new customers.

The U.S. Court of Appeals for the Federal Circuit, which hears patent disputes in Washington, D.C., blocked the injunction from taking effect until the judges were able to consider arguments in the patent case brought by Verizon Communications.

During a Friday morning hearing here that lasted about an hour, U.S. District Judge Claude Hilton ordered Vonage not to accept any new customers while it continues to infringe on Verizon's patents covering some aspects of Internet phone calls.

A copy of the one-page appeals court order(PDF) provided to CNET News.com by Vonage's legal counsel gives Verizon until April 13 to respond to the voice over Internet Protocol company's request to lift the injunction during the appeal process. It was signed by Chief Judge Paul Michel.

Roger Warin, Vonage's attorney, protested Hilton's no-new-customers order during Friday's hearing. Arguing the decision was just as threatening to Vonage as a full injunction, he said "it would be the difference of cutting off oxygen as opposed to a bullet to the head."

He also told Hilton that "in effect, what you are doing is slowly strangling Vonage, because it cannot preserve that customer base" indefinitely. He noted that Vonage's customer turnover rate is 2.5 percent per month.

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