Gemstar, S-A Settle Patent Suit

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Gemstar TV-Guide International Inc. has settled a long-standing patent-infringement lawsuit against Scientific-Atlanta Inc., agreeing to enter into a multiyear patent-technology-licensing agreement with the set-top-box maker.

According to the deal, Gemstar and S-A will enter into cross-licensing agreements granting each access to the other’s interactive-program-guide patents.

The companies also entered into a porting agreement under which S-A will assist Gemstar to make TV Guide Interactive IPGs available on S-A’s “Explorer” set-top platform, which should give Gemstar an inroad with MSOs like Cablevision Systems Corp. and Cox Communications Inc., which use S-A boxes.

The agreements, which will last up to nine-and-a-half years, will require S-A to pay Gemstar a minimum of $154 million over the life of the deal. Gemstar will, in turn, pay S-A $89 million during the period.

“We look forward to a productive new relationship, providing Scientific-Atlanta with the considerable benefits from Gemstar's years of IPG development and providing new choices for our mutual customers as we both deploy products throughout the world,” Gemstar CEO Rich Battista said in a statement.

The settlement is the latest for Gemstar, once notorious for its litigious nature regarding its guide patents.

In February 2004, the company settled a similar lawsuit with Pioneer Electronics Corp., with Pioneer receiving the right to incorporate Gemstar technology in its guides in return for license fees and a one-time payment of $14 million.

In March of that same year, Gemstar settled its litigation against EchoStar Communications Corp., with the No. 2 direct-broadcast satellite service provider ponying up $190 million for Gemstar intellectual property and agreeing to collaborate on a customized version of TV Guide On Demand. EchoStar also agreed to launch TV Guide Channel and to extend an existing distribution agreement for Gemstar’s horse-racing channel, TVG Network.

News of the deal sent the stocks of both companies up in afternoon trading Thursday. Gemstar shares rose 28 cents to $3.55 each, while S-A stock was up $1.35 each to $35.35 per share in afternoon trading.

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