Verizon Communications will pay TiVo at least $250 million to settle the DVR company’s pending patent litigation, and the companies are also exploring the distribution of the Internet video streaming service being developed by Verizon’s joint venture with Redbox to TiVo retail DVRs.
As part of the settlement, TiVo and Verizon agreed to dismiss all pending litigation between the companies with prejudice. The parties also entered into a cross-licensing agreement of their respective patent portfolios in the advanced television field.
In May 2011, TiVo reached a landmark patent settlement last year with Dish Network worth more than $600 million, covering the TiVo "Time Warp" patent on simultaneous storage and playback of TV programming. TiVo also struck a deal with AT&T under which the telco will pay TiVo as much as $300 million.
TiVo still has lawsuits pending against Time Warner Cable, Cisco Systems and Motorola Mobility (now owned by Google).
Verizon spokesman Ed McFadden said in an emailed statement, “We are pleased to have reached this settlement with TiVo.”
Last month, TiVo had told investors it was expecting to incur higher legal fees from the Verizon litigation, which had been set to go to trial in October.
"We are pleased to reach an agreement with Verizon which underscores the significant value our distribution partners derive from TiVo's technological innovations and our shareholders derive from our investments in protecting TiVo's intellectual property," TiVo president and CEO Tom Rogers said in a statement.
Rogers continued, "We also look forward to working together on a variety of future opportunities as we continue to expand the content choices available to TiVo subscribers. As with prior settlements, we also benefit by being able to operate our business under license from Verizon and by avoiding future legal expenses that we would have incurred during and after trial. Furthermore, we believe this settlement positions us well with respect to future enforceability of our patents."
Under the terms of the settlement, Verizon will provide TiVo total compensation worth at least $250.4 million. The payments from Verizon to TiVo will comprise a $100 million initial cash payment followed by recurring quarterly payments totaling an additional $150.4 million through July 2018. If the companies pursue certain commercial initiatives prior to Dec. 21, 2012, up to $29.4 million of the payments made by Verizon would be subject to a credit of an equal amount, according to TiVo.
In addition to the guaranteed compensation, Verizon also will pay monthly license fees through July 2018 for each Verizon DVR subscriber in excess of certain predetermined levels.