TiVo Gets Payday From AT&T Suit

By Todd Spangler -- Multichannel News, 1/9/2012 12:01:00 AM

TiVo has settled its patent litigation with AT&T, under which the telco will pay at least $215 million over the next six years — and Verizon Communications is next in the digital video recorder company’s crosshairs.

Under the terms of the settlement, AT&T agreed to pay TiVo an initial payment of $51 million, followed by recurring quarterly guaranteed payments through June 2018, totaling $164 million. In addition to those minimum payments, AT&T will pay quarterly per-subscriber monthly license fees through July 2018 in the event that AT&T’s DVR subscriber base exceeds certain levels.

“Based on currently available industry forecasts, TiVo expects that the total fees payable to it by AT&T under the agreement will significantly exceed the guaranteed minimum payment to TiVo,” TiVo said in an 8-K filing last week with the Securities and Exchange Commission.

AT&T declined to comment. The trial in TiVo’s litigation with AT&T was scheduled to begin this month in the U.S. District Court for the Eastern District of Texas.

TiVo and AT&T agreed to dismiss all pending litigation between the companies with prejudice as part of the settlement. In addition, the companies entered into a crosslicensing deal covering their respective patent portfolios in the advanced TV field.

In May 2011, TiVo reached a landmark $500 million settlement with Dish Network, after seven years of litigation. The key patent at issue was TiVo’s Time Warp patent, U.S. Patent No. 6,233,389, which covers the simultaneous playback and recording of TV programming.

TiVo still has litigation pending with Verizon, Motorola Mobility and Microsoft. TiVo sued AT&T and Verizon in August 2009 alleging infringement of the Time Warp patent, as well as two other TiVo-owned patents: U.S Patent Nos. 7,529,465 (“System for Time Shifting Multimedia Content Streams”) and 7,493,015 (“Automatic Playback Overshoot Correction System”).

“We are extremely pleased to reach an agreement with AT&T, which acknowledges the value of our intellectual property,” TiVo president and CEO Tom Rogers said in a statement.

The deal comes after TiVo posted its first net subscriber gain in more than four years for the quarter ended Oct. 31, 2011, attributable to the rollout of a TiVobased box by U.K. cable operator Virgin Media. TiVo is banking on similar deals with pay TV operators including Charter Communications, DirecTV, Suddenlink Communications and RCN to rebuild its business.