The internet telephony industry let out a collective sigh of relief Tuesday after a federal appeals court issued a stay order allowing Vonage to continue signing up new customers during its appeal in a major patent-infringement case.

The case is being closely watched by the internet telephony industry, as opponent Verizon's patents might also affect other voice-over internet protocol, or VOIP, providers' ability to connect their services to the public telephone network. Tuesday's temporary reprieve (.pdf) means the window for dozens of other VOIP carriers remains open, for the time being, while Vonage attempts to disprove Verizon's wide-ranging patent claims.

The original injunction would have completely blocked Vonage's ability to sell its VOIP service. That injunction stemmed from a patent-infringement lawsuit brought by Verizon last June, alleging that Vonage violated seven of Verizon's patents.

The courts eventually ruled in favor of the telecom giant, recognizing three patent infringements, and ordered Vonage to pay Verizon $58 million in damages and a 5.5 percent royalty rate on each Vonage customer.

Vonage is currently the largest VOIP provider in the United States, with approximately 2.2 million users.

The case currently before the U.S. Court of Appeals for the Federal Circuit is a litmus test that may well determine the future of the telecom industry. If Verizon's patent claims against Vonage hold up in the appeals court, the fate of many smaller VOIP companies, such as SunRocket and Packet8, could immediately be put in jeopardy, as the same patents could also prevent them from connecting their internet phone services to the public phone network.

The short-term effect could give Verizon a de facto VOIP monopoly. Long-term, the case could affect more purely internet-based communication services, such as those offered by peer-to-peer telephony leader Skype.

SunRocket distanced itself from the technology and patent issues involved in the Vonage case. "We cannot comment on intellectual property matters," said spokesman Jeremy James. "What we can say is that SunRocket's network is architected differently from Vonage's."

Still, some VOIP experts believe Verizon's legal claims are bound to fail. Jeff Pulver, a VOIP pioneer and early partner of Vonage founder and interim CEO Jeffrey Citron, recently noted that Verizon's patent claims describe a process that Pulver helped create in 1995, well before the Verizon patent.

Apparently, Vonage agrees with Pulver's assertions. After Tuesday's stay order, Vonage's Sharon O'Leary said, "We believe the original verdict was based on an erroneous claim construction.... As a result, (the district court's decisions) artificially expanded the coverage of Verizon's patents well beyond what was intended by the patent trademark process."

As the industry watches the embattled company fight for its life, the future of VOIP hangs in the balance, even as millions of people remain mostly unaware that the way they have become accustomed to making calls could drastically change in the near future.

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