Policy

TiVo Gets Payday From AT&T Suit

1/09/2012 12:01 AM Eastern

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.

June