Rovi Sues Comcast and MSO’s Set-Top Suppliers

Rovi shares plunge as it claims Comcast is infringing on 14 U.S. patents (Updated)
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Rovi Corp. said it has filed a patent suit against Comcast alleging that the MSO, together with its set-top suppliers, are infringing on 14 of Rovi’s U.S. patents that deliver features such as remote recording, its AnyRoom DVR (multi-room) capabilities and search for its X1 platform.

Rovi said it is seeking an injunction and unspecified damages tied to the alleged infringement. Rovi, which is reportedly in acquisitions talks with TiVo, said it filed the lawsuit, in the Eastern District of Texas, Marshall Division, after “numerous attempts” at negotiating a new licensing deal.

Update: Rovi shares plunged $2.82 (13.75%) to $17.69 each in morning trading Friday. Comcast shares were virtually unchanged – up 4 cents (0.06%) to $61.12 each at last check. 

Comcast, which sources boxes from suppliers such as Arris, Technicolor and Samsung, has been asked for comment. Rovi has been asked for further clarity on the patents in question and which set-top suppliers it is identifying. 

Update: Comcast issued this statement on Friday: “We disagree with Rovi’s accusations and intend to defend the cases vigorously.  Beyond that, we can’t comment on pending litigation."

Rovi also confirmed Friday that the other parties identified in the suit include Arris, Pace (the U.K.-based vendor acquired by Arris in January), Technicolor and Humax.

Here are the patents in question:

- 8,713,595 Interactive Program Guide Systems and Processes

· 8,755,666 Interactive Television Program Guide with Remote Access

· 7,996,864 Method and Apparatus for Displaying Television Programs and Related Text

· 9,172,987 Methods and Systems for Updating Functionality of a Set-Top Box Using Markup Language

-7,895,218 Method and System for Performing Searches for Television Content Using Reduced Text Input

-8,122,034 Method and System for Incremental Search with Reduced Text Entry Where the Relevance of Results is a Dynamically Computed Function of User Input Search String Character Count

-8,433,696 Method and System for Processing Ambiguous, Multiterm Search Queries

-6,725,281 Synchronization of Controlled Device State Using State Table and Eventing in Data-Driven Remote Device Control Model

-8,006,263 Interactive Television Program Guide with Remote Access

-8,578,413 Interactive Television Program Guide with Remote Access

-8,046,801 Interactive Television Program Guide with Remote Access

-8,621,512 Interactive Television Program Guide with Simultaneous Watch and Record Capabilities

-8,768,147 Systems and Methods for Interactive Program Guides with Personal Video Recording Features

-8,566,871 Multiple Interactive Electronic Program Guide System and Methods

“For over a decade, Comcast built its business using Rovi’s patented technology, which it licensed for a fixed term,” Rovi president and CEO Tom Carson said, in a statement. “Comcast’s decision to continue using Rovi’s pioneering technology as an unlicensed infringer is simply intolerable. After numerous attempts at negotiations, Rovi was left with no choice but to defend its intellectual property from unlicensed use.”

He added that Rovi is “disappointed that Comcast remains unlicensed,” arguing that the vendor believes the MSO  requires a license “to offer many of its personalized discovery features to its customers.”

X1 continues to be a major priority for Comcast as looks for the next-gen platform to give its pay TV sub numbers a boost. Comcast has been deploying about 40,000 X1 boxes a day and has about 35% of its video base on the platform, a number that it hopes to push to 50% by year end.

Rovi’s lawsuit against Comcast comes about as the company continues attempts to lock up new multi-year deals with its “big four.”

Rovi has already struck a new deal with Charter Communications, which is in the process of acquiring Time Warner Cable and Bright House Networks. Rovi disclosed in an SEC filing yesterday that it has entered an extention of its existing deal with TWC, which has set to expire on March 31. "The agreement is extended through December 31, 2016 unless earlier terminated according to its terms by Rovi," Rovi explained.

Of Rovi's big four customers (Charter and TWC are in that group), that still leaves Comcast and Dish Network.

Rovi also announced today that it and  Dish have “agreed to a standstill,” during which they agree not to sue each other in order to allow discussion to continue pertaining to the possible extension of their current license agreement, which remains in effect until April 5.

Rovi said it has not altered the financial estimates for 2016 issued on February 11 (revenues of $490 million to $520 million, and earnings of $1.35 to $1.65 per share) as they already excluded any revenues associated with renewals with Comcast and Dish from those estimates.  

“Rovi’s estimates planned for legal expenses and excluded any licensing or advertising revenues from Comcast after March 31, 2016,” Rovi said Friday.