A federal judge dealt a blow to Vonage Holdings Corp. that sent its stock reeling on Friday, when he agreed to bar the company from using Internet phone call technology patented by Verizon Communications Inc.
Vonage said it was confident its customers would not experience service interruptions, but investors sent its shares down nearly 26 percent.
U.S. District Judge Claude Hilton said he would delay signing the order for two weeks to give Vonage time to try to convince him to stay the injunction while it appeals the entire patent infringement case. "I will sign the injunction at the time I rule on the stay," Hilton said at a hearing.
Hilton agreed with Verizon that it would suffer irreparable harm if he allowed continued infringement of the Voice-over-Internet Protocol (VoIP) technologies that allow consumers to make calls over the Internet.
He rejected arguments by Vonage that the harm to Verizon, the No. 2 U.S. telephone company, was outweighed by other factors, including the public interest.
"I don't think it's going to kill Vonage," said Albert Lin, an analyst at American Technology Research. But he said the legal costs and management distractions were disruptive.