Chalking up another win for its patent attorneys, Gemstar-TV Guide International Inc. reached a $200 million settlement last week with set-top maker Motorola Inc., which inherited the lawsuit when it bought General Instrument Corp.
Gemstar-TV Guide executives used the settlement, in which Motorola agreed never to sell its own interactive program guide to cable operators, as an opportunity to warn other IPG companies that Gemstar-TV Guide's patents are rock solid.
"It should not be lost upon anybody the significance of the economics of this settlement vis-à-vis other parties who have chosen to not respect the patents," TV Guide-Gemstar co-president and chief operating officer Peter Boylan said at a conference with analysts.
TV Guide-Gemstar has filed patent-infringement suits against technology vendors Scientific-Atlanta Inc., Pioneer New Media Technologies and TiVo Inc.
The Motorola settlement followed an arbitration decision last October. GI was ordered to pay Gemstar $40 million for breaching a licensing deal reached with StarSight Telecast Inc. in 1992.
"There was a ruling against us already," Motorola corporate vice president Bob Scott said last week. "It's litigation, and litigation is uncertain."
Under the settlement, Motorola gets a long-term "make-and-sell" license agreement, which will allow it to ship set-tops containing Gemstar-TV Guide IPG technology. Cable operators will have to cut separate deals with Gemstar-TV Guide before they can offer the IPG to subscribers, Boylan said.
It's not clear if the settlement affects competing IPG vendors using Motorola Broadband Communications Sector set-tops. Insight Communications Co. offers Source Media Corp.'s IPG on Motorola set-tops to about 100,000 subscribers. Insight is the only MSO running an IPG other than TV Guide Interactive in that way, Boylan said.
Motorola also agreed to license all IPG-related technology to Gemstar, royalty-free.
The two parties also agreed to collaborate on future interactive-television initiatives, but didn't commit to any specific ventures.
Gemstar-TV Guide and Motorola executives said the companies could work together on developing electronic book applications. Boylan said they might collaborate in the personal-video recorder category, "where we firmly believe you can't do time-shifted TV and PVR activities without utilizing our technology and patents."
Motorola, Charter Communications Inc., Vulcan Ventures and ReplayTV Inc. recently announced plans to develop PVR technology for cable set-tops.
Scientific-Atlanta spokesman Paul Sims said S-A was not in settlement discussions with Gemstar-TV Guide.
"The settlement of the Motorola-Gemstar litigation will have no impact on Scientific-Atlanta's litigation with Gemstar, or on our business," he said.
TiVo spokeswoman Rebecca Baer said the company doesn't comment on pending litigation. Pioneer representatives didn't return calls.