Vonage v. Verizon (Fed. Cir. 2007).
In a rare emergency hearing on April 24, the Federal Circuit heard Vonage’s plea for a stay of an injunction that would bar the upstart VOIP company from contracting with new customers. Soon after the hearing, the CAFC agreed — staying any injunctive relief pending appeal. The full appeal will also follow an expedited schedule and is scheduled for oral arguments on June 25, 2007.
This appeal comes on the heel of the jury verdict finding that Vonage infringes three Verizon patents. (6,282,574, 6,104,711, 6,359,880). These patents all relate to various aspects of Internet telephony. Following the jury verdict, the District Court Judge issued a permanent injunction against Vonage, but granted a partial stay. Under the district court’s decision, the stay would have allowed Vonage to continue operation, but would have barred the Internet Telephone company from signing-up any new customers in the interim.
Rule 62(a) of the Federal Rules of Civil Procedure provides the general rule that a permanent injunction "shall not be stayed" pending appeal. According to the rule, however, such a stay is generally within the discretion of the district court. Likewise, the CAFC has, at times, also exerted its discretion to stay injunctive relief pendente lite.
The jurisprudence regarding patent stays is fairly scarce. Perhaps for obvious reasons, emergency stays are usually issued without any substantive opinion. There are a few cases outlining the basic approach to determining whether to issue a stay. In Standard Havens (1990) the Federal Circuit announced a four-factor test for considering whether to issue a stay pending appeal.
- Likelihood of success on the merits of the appeal;
- Irreparable harmed absent a stay;
- Irreparable harm due to a stay (continued infringement); and
- Public interest.
For Vonage, issuance of the permanent injunction would be equivalent to the proverbial fat lady singing through the Internet pipes. A full injunction would seemingly destroy Vonage’s core business — leaving its customers ready for the picking.
The CAFC’s swift action in these cases shows that it understands the critical business importance of the stay.