Shares of Vonage Holdings Corp., the Internet phone company that lost a patent-infringement suit last month, dropped 10 percent on concern the company may be prohibited from signing up new customers.

The stock declined 34 cents Monday to close at $3.03 in New York Stock Exchange composite trading. Vonage said in a statement that a temporary stay on a judge's ban on new customers is the "first step" toward a legal resolution in its favor.

A jury found in March that Holmdel-based Vonage infringed Verizon Communications Inc.'s patents and should pay $58 million and a 5.5 percent royalty. Verizon claimed Vonage lured away 600,000 customers by copying technology such as voice-mail features, as well as the method for allowing Internet calls to reach traditional phone lines.

"Shares will remain very volatile until there's visibility around the legal challenges," said Richard Greenfield, an analyst at Pali Capital in New York. He has a "sell" rating on Vonage shares.

The U.S. Court of Appeals for the Federal Circuit in Washington issued the stay on Friday. U.S. District Judge Claude Hilton in Alexandria, Va., ordered the company earlier that day to stop adding subscribers.

Vonage will post a bond of $66 million and will pay the 5.5 percent royalty rate into escrow during the appeals process. The company said it believes it will win the case on appeal and is developing technology to work around Verizon's patents.

"We cannot envision how Vonage continues operations unimpeded" if it's unable to convince the appeals court and can't produce an alternative technology, Greg Miller, an analyst with Deutsche Bank in Greenwich, Conn., said today in a research note.

A work-around would require changes to software from several other companies and may involve replacing customers' equipment, said Clayton Moran, an analyst at Stanford Group Co., in a research note.

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