Vonage prohibited from signing new customers

With the recent squabbles between telecom powerhouse Verizon Communications (NYSE: VZ) and upstart VoIP telephone provider Vonage (NYSE: VG), one would think that some kind of viable semi-conclusion would be about to drop. Not so, as a judge ordered Vonage to suspend signing up new customers today via an injunction as a way to punish the shaky Voice-over-IP telephone company for infringing on Verizon's patents.

Although Verizon won a lawsuit in March that Vonage had violated three of its patents, Vonage was probably contemplating appeal options until this bombshell dropped today. It's never a good thing when a court of law prohibits you from signing up new customers, so Vonage has most likely entered full-blown damage-control mode. Not only does the company need to appeal the $58 million infringement verdict and the 5.5% of future revenue based on the exact patents violated, but now it has to deal with the dreaded "no new customers" angle. Whew -- what a blow.

It could have been worse -- Verizon could have pushed for the shutdown of Vonage's entire network, putting millions of consumers out of touch. But bless 'em, the company sought only to prevent new customers from being signed up. Though on the ropes a bit, Vonage does believe it can have the recent verdict overturned with an upcoming appeal. Vonage uses existing data lines (regardless of providers) to provide Internet-based telephone service to subscribers for amazingly cheap rates (no long distance charges), so the company has gained a sizable and loyal following. For customers contemplating a change to Vonage -- you're banned. At least, for now.