Patent disputes typically occupy a quiet corner of the technology business, surfacing only when a major settlement between larger companies is finally carved out.
But the still-raging two-year battle between Comcast and TiVo continues to grab headlines, with the latter technology company fighting for its very survival against a leading cable operator that appears to be done paying royalties, at least voluntarily.
Last week, Comcast appeared to take the upper hand, with the U.S. Patent and Trademark Appeals Board invalidating two more TiVo patents. But in the complicated dispute — involving myriad separate lawsuits and complaints in federal courts and other venues, as well as dozens of individual patents — TiVo said it’s still on track to prevail and protect an intellectual property licensing business that includes more than 6,000 patents, and which generated $81.1 million for the company in the second quarter alone. That was close to half of its $172.9 million in consolidated Q2 revenue.
TiVo has patent-licensing agreements in place with every major U.S pay TV operator. But Comcast hasn’t paid TiVo royalties since its last agreement expired in April 2016. And TiVo, which saw its patent litigation costs increase to $5.6 million in Q2, says it it’s not going to quit trying to chase down the No. 1 U.S. cable operator until it pays up.
“It would be untenable to let someone free ride when rest of the industry is paid,” an individual close to TiVo’s legal team told Multichannel News.
Comcast isn’t breaking out its litigation costs amid quarterly revenue figures that exceed $20 billion. Company reps won’t comment much amid the court battle and declined to comment for this story. Comcast now supports its own R&D facilities, and seeks at every opportunity to position itself as a tech company that engineers its own software and gadgets. Comcast officials said the MSO came up with virtually all of the tech in its X1 video platform on its own, and is done paying TiVo royalties on what it views as outdated technology.
The Rovi Story
To understand how TiVo, the company that pioneered the digital video recorder, got to this place, it’s helpful to go back to 2008. That’s when Macrovision, a company that specialized in creating content security software for DVDs, acquired program-guide maker Gemstar-TV Guide and declared itself “the homepage for the TV experience.” Macrovision rebranded as Rovi in 2009 and began licensing full portfolios of patents revolving around search and recommendation, among other advanced TV-viewing behaviors.
In 2016, the company combined its patent collection with that of Intellectual Ventures, creating one of the biggest total patent portfolios in all of tech.
The portfolio grew even bigger with the $1.1 billion acquisition of TiVo that same year — which occurred shortly after the erstwhile Rovi fired the first salvo against Comcast, suing the cable company in federal court and filing a complaint with the International Trade Commission.
With two separate ITC cases, as well as different federal lawsuits in Texas and New York, all focused on differing sets of patents, laying out the legal chess board gets pretty complicated. But TiVo said that’s its strategy — to fight Comcast in as many venues as possible, and over as many patents as it can, in the hope that it wears down its larger opponent.
If you read the headlines, TiVo doesn’t appear to be winning.
On Aug. 27, the U.S. Patent and Trademark Appeals Board (PTAB) sided with Comcast and invalidated Patent No. 8,713,595, “Interactive Program Guide Systems and Processes.” A Sept. 7 board ruling invalidated No. 9,172,987, “Methods and Systems for Updating Functionality of a Set-top Box Using Markup Language.” And a Sept. 10 board determination invalidated Patent No. 8,768,147, “Systems and Methods for Interactive Program Guides with Personal Video Recording Features.”
The source close to TiVo’s legal team told MCN the PTAB is expected to side with petitioner Comcast most of the time. But TiVo needs only the occasional win to press its strategy, which is to make Comcast disable or inefficiently alter so many features in X1 that customers start complaining and Comcast is forced to settle with TiVo.
The strategy was highlighted in December, when the ITC shot down most of TiVo’s patent assertions, but upheld a TiVo patent on a technology that enabled X1 users to set DVR recordings remotely. Comcast responded by removing the feature from X1, claiming only 1% of X1 customers used it.
Change to Search Methods?
The TiVo source, meanwhile, said that with Comcast unable to seek PTAB review of Patent No. 8,122,034, which pertains to search technology, the cable company has made algorithmic-level changes in how it ranks searched programs.
“They made internal changes to their software, and as a result, every search is less relevant to the user,” he said. (Comcast representatives declined to comment.)
Of course, with X1 now in more than 60% of Comcast homes and the MSO still raving about how the platform reduces churn in earnings reports, there don’t yet seem to be user forums overflowing with dissatisfied Comcast X1 customers.
But the battle goes on, with hearings set to begin for TiVo’s latest ITC complaint in October. “In Comcast’s view, there’s no value in patents that all of its competitors have paid hundreds of millions of dollars to license,” the TiVo source said. “You can develop new technology that infringes on the rights of others, even if you’re developing an improvement on somewhat else did.”