Arris-Moto Deal Caps Potential Patent Payments to TiVoGoogle Grants Provisions to Limit Potential Liability from TiVo Lawsuit and Other Litigation 12/20/2012 4:06 AM Eastern
As part of Arris Group’s proposed $2.35 billion deal for Motorola Mobility’s cable-focused Home division, Google included provisions to cap potential liability from certain patent-infringement lawsuits, including TiVo’s pending litigation.
The companies did not disclose the maximum payments Arris could be liable for, but Google would foot the bill beyond a certain amount.
“Google has taken that risk off the table for Arris,” Arris chairman and CEO Bob Stanzione said on a conference call Wednesday. He characterized the potential patent liability as a "very small number" that would not be material for Arris.
Arris would acquire about 1,000 patents with the Motorola Home deal, and will have license to a “wide array” of other Motorola Mobility patents, according to the company. The combined entity will have a portfolio of about 2,000 issued and in-process patents, according to Arris.
Through its patent-litigation strategy, TiVo has scored more than $1 billion in cash settlements with Dish Network, AT&T and Verizon Communications payable over the next six years.
In March 2012, TiVo sued Time Warner Cable and Motorola Mobility, alleging they violate three of its patents. That came after Motorola last year filed a patent-infringement suit against TiVo, following the DVR company’s suit against Verizon.
Wall Street analysts covering Arris had been concerned that the TiVo lawsuit against Motorola would create an “overhang” on a potential Arris acquisition of the Home division.
Raymond James analyst Simon Leopold, in a Nov. 10 research note, noted that no buyer of Motorola Home would “accept exposure to the lawsuit.” But, he added, “we believe that it’s likely the damages that would be awarded [to TiVo] could be offset since Motorola filed their own lawsuit against TiVo in 2011.”
Arris and Google expect the deal to close in the second quarter of 2013, pending regulatory approval and other closing conditions.