Verizon Socked With TV-Patent Bill

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David has hit pay dirt in its fight
with Goliath.

Verizon Communications must pay upwards of
$260 million — or more — to interactive TV vendor
ActiveVideo Networks for violating the vendor’s patents,
a federal appeals court ruled.

It wasn’t an outright defeat for Verizon: The telco won’t
be forced to disable its FiOS TV set-tops or develop a workaround
for the patents owned by ActiveVideo, whose
biggest customer is Cablevision Systems.

A three-judge panel for the U.S. Court of Appeals
for the Federal Circuit ruled Aug. 24 partly in Verizon’s
favor by reversing a lower court’s permanent
injunction barring the telco from employing the ActiveVideo
patents. The appeals court also reversed the
district court’s judgment of infringement against Verizon
on one of ActiveVideo’s patents, while affirming
that the telco infringed three others.

However, the appeals court upheld
the damages awarded to ActiveVideo
in full and also affirmed the district
court’s imposition of a sunset royalty. “Though we vacate
the district court’s injunction, we see no error in its
post-verdict royalty calculation,” the appeals court said
in the ruling.

The appeals court overturned the permanent injunction,
saying the lower court erred in determining ActiveVideo
faced “irreparable harm.” In part, it ruled, if
Verizon wins a customer away from Cablevision, while
ActiveVideo loses a licensing fee, “straightforward monetary
harm of this type is not irreparable.”

Verizon declined to comment on the ruling.

ActiveVideo said in a statement, “We’re gratified that the
Court of Appeals for the Federal Circuit has upheld the validity
of ActiveVideo’s patents and affirmed the jury verdict
and district court decisions,” including the damages award.

ActiveVideo sued Verizon in May 2010 over patents
covering interactive TV and video on demand. A federal
jury in Virginia found Verizon’s FiOS TV violated four
ActiveVideo patents and awarded ActiveVideo $115 million
in damages.

Last November, a federal district court judge in Virginia
issued a permanent injunction, slated to have gone
into effect May 23, barring Verizon from using two of
the patents, and ordered the telco to pay $2.74 monthly
per FiOS subscriber until then. (The injunction and payments
were stayed pending Verizon’s appeal.)

In its ruling, the appeals court remanded part of the
decision to the Virginia district court to determine “an
appropriate ongoing royalty,” adding that “ActiveVideo’s
bargaining position is even stronger after this

Prior to ActiveVideo's lawsuit, Verizon had sued Cablevision and brought a complaint before the U.S. International Trade Commission, alleging the MSO violated several telco-owned patents.The ITC last fall rejected Verizon's claims.