The U.S. Court of Appeals for the Federal Circuit in Washington D.C. issued Vonage a permanent stay of a previous court's injunction that would have barred it from signing up new customers. Vonage sought the stay following an April 6th decision by the U.S. District Court in Alexandria, Va. enjoining the company from using certain VoIP technology to add new customers. The permanent stay enables Vonage to add new customers as we pursue our appeal. Existing customers remain unaffected by the company's ongoing patent litigation.

"We thank the appellate court for its thoughtful consideration of the merits of our case," said Jeffrey Citron, Vonage chairman and interim chief executive officer. "It's business as usual for us. We will continue providing reliable, quality digital phone service at the best value in the market and connecting thousands of phone calls every day. We remain focused on growing and strengthening our business and driving toward profitability."

Citron added, "We continue to believe we have not infringed on any of Verizon's technology and remain optimistic that we will ultimately prevail in this litigation."

Vonage will continue to serve existing customers by paying into escrow a quarterly royalty of 5.5 percent throughout the appeals process and by posting a $66 million bond as required by the court. The company's current cash position allows it to pay these fees to secure the stay as it continues to make progress on and pursues its legal appeal over the coming months.

Appeal

Vonage remains highly confident in the strength of its legal appeal.

"We believe the original verdict was based on an erroneous claim construction -- meaning the patents in this case were defined in an overly broad and legally unprecedented way," said Sharon O'Leary, Vonage's executive vice president, chief legal officer and secretary. "We believe the district court's decisions repeatedly neglected well-established law on claim construction and, as a result, artificially expanded the coverage of Verizon's patents well beyond what was intended by the patent trademark process."

O'Leary continued: "We are confident this error will be rectified by the appeals court, which hears intellectual property cases exclusively. As a result, we remain highly confident Vonage will prevail on appeal."