Gemstar-TV Guide International Inc.'s recent loss at the International Trade Commission will likely result in more competition in the interactive-program-guide arena for the company, as some MSOs, who were awaiting a resolution to the case, may cut deals with Gemstar competitors. Cox Communications Corp., one of the few MSOs that Gemstar hasn't signed to a long-term license for its TV Guide Interactive IPG, now plans to use Pioneer Corp.'s guide as the exclusive IPG for its digital cable systems, spokeswoman Laura Oberhelman said last week.
Gemstar filed the ITC complaint against Pioneer, Scientific-Atlanta Corp., EchoStar Communications Corp. and EchoStar vendor SCI Systems Corp., seeking an order that would prevent the companies from importing what Gemstar claimed were IPGs that infringed upon its patents.
But ITC administrative law judge Paul Luckern found in his June 21 ruling that the companies did not illegally import set-tops that infringed Gemstar's patents. Luckern also found that Gemstar misused one of its IPG patents.
ITC commissioners still must approve Luckern's decision, but in previous cases, the commission has almost always agreed with the ALJ.
Gemstar has already signed several MSOs to long-term IPG-license agreements, including AT&T Broadband, Charter Communications Inc. and Comcast Corp.
But Gemstar does not have contract with Cablevision Systems Corp. — which has developed its own IPG for its iO: Interactive Optimum digital offering — or Time Warner Cable, which uses Pioneer's Passport IPG.
Gemstar has maintained that a broad license it signed with America Online in 1999, before the company's merger with Time Warner Inc., would require Time Warner Cable to use TV Guide Interactive. In an interview the week before the ITC decision was released, Gemstar CEO Henry Yuen said Gemstar was close to finalizing an IPG distribution agreement with Time Warner Cable.
Time Warner Cable spokesman Mark Harrad declined to comment last week when asked if the company planned to deploy TV Guide Interactive and whether the MSO's decision would be affected by the ITC decision.
Gemstar general counsel Jonathan Orlick said the company hopes the six ITC commissioners will vote to reverse Luckern's decision. But if the commission accepts the decision, Gemstar will take their case to the U.S. Court of Appeals.
Gemstar had hoped that the ITC case would spark a settlement in a separate patent suit the company is waging against S-A, EchoStar and Pioneer in a federal district court in Atlanta.
Orlick said Gemstar has filed for a summary judgement in that case, and that the court has scheduled a hearing in August to address the motion.
Gemstar's stock was pummeled in March, after it disclosed that it had booked more than $100 million in revenue from S-A that it hoped to receive if it won the patent suit in Atlanta.
Despite the ITC loss, Yuen told analysts last week that he hasn't decided whether to adjust Gemstar's accounting to remove the booked S-A revenue, noting that the company wanted to take more time to study the ITC decision.
Following the June 21 ITC decision, shares in Gemstar dropped from $8.20 to $5.00 per share last Monday. The stock closed at $5.09 last Thursday.