TiVo shares rose more than 10% in after-hours trading Tuesday after the International Trade Commission handed down a final ruling finding that Comcast had violated two TiVo patents.
According to the notice posted today, the ITC, following its investigation, has issued a “limited exclusion order prohibiting the importation of certain digital video receivers and hardware and software components” and had “issued cease and desist orders…directed to the Comcast respondents. The investigation is terminated.”
In addition to Comcast, other respondents in the ITC case include set-top suppliers such as Technicolor, Arris and Pace Ltd. (Arris acquired U.K.-based Pace in January 2016).
“Rovi is pleased the International Trade Commission issued its final ruling in our favor and found that two Rovi patents are valid and infringed by Comcast’s X1 products, and issued an exclusion order that bans Comcast from importing and selling X1 devices that infringe our valuable intellectual property,” Rovi, a TiVo company, said in a statement. “Today’s Commission Opinion reinforces the need for Comcast to take the necessary licenses to our IP.”
TiVo and Rovi completed their merger last fall. Though TiVo/Rovi has recently renewed and/or extended patent and licensing deals with several other major MVPDs, including AT&T of late, it and Comcast have not yet come to terms on a new agreement. The ITC ruling could hasten a new deal between TiVo and Comcast.
Update: Comcast issued this statement:“We respectfully disagree with the ITC’s decision in this matter. In fact, Rovi has never disputed that Comcast or its predecessors independently developed our X1 platform and our cloud- and app-based technology. While we believe the ITC reached the wrong decision, we will remove this feature from those offered to our subscribers while we pursue an appeal.”
The feature Comcast is referring to is functionality that lets video customers schedule DVR recordings remotely from mobile devices that they would watch later via the set-top box.
Comcast also has deals in place to license/syndicate its X1 platform to other MSOs, including Cox Communications (it inked a multi-year intellectual agreement with Rovi in 2010) and three based in Canada (Rogers Communications, Shaw Communications, and Videotron), which seemingly would have no bearing as this is a U.S.-focused case). Shaw is already facing a legal challenge from Nagra and OpenTV over the MSO's BlueSky TV service, which leans on Shaw's X1 syndication deal with Comcast.
The ITC’s final ruling follows an initial determination in May finding that various respondents, including Comcast, had violated two TiVo patents – No. 8,006,263 and 8,578,413 that describe “Interactive Television Program Guide with Remote Access”– and that other four patents asserted by TiVo/Rovi in the case “were found to have no violation at this point.”
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“Having examined the record in this investigation, the Commission has determined to affirm the Final ID’s conclusion that Comcast has violated section 337 in connection with the asserted claims of the ’263 and ’413 patents,” the ITC said in the notice issued today. “More particularly, the Commission affirms the Final ID’s determination that Comcast imports the accused X1 set-top boxes (“STBs”), and takes no position as to whether Comcast is an importer of the Legacy STBs. The Commission also takes no position on as to whether Comcast sells the accused products after importation.”
Regarding what’s next, the final ITC notice now heads to a 60-day Presidential period, where the exclusion order will be reviewed and a decision will be made as to whether there’s a public health policy reason to suspend it. That’s considered unlikely in this instance.
Comcast also has the option to appeal the notice to the federal circuit, though such action isn't expected to slow TiVo’s ability to stop infringing boxes from entering the U.S.
The ITC ruling doesn’t factor in any monetary damages. TiVo is seeking those in two separate court cases occurring in the Southern District of New York. One involves the same patents covered in the ITC case, which had been under a stay until the Commission determined a final ruling.
In 2016, prior to its merger with TiVo, Rovi filed a patent suit against Comcast in the Eastern District of Texas, Marshall Division, alleging that the cable operator, together with a handful of its set-top suppliers, including Arris/Pace, Technicolor and Humax, are infringing on 14 patents that, it claims, covers features such as remote recording and search for Comcast’s X1 platform.