ITC DECISION IMMINENT IN GEMSTAR PATENT CASE
CE industry and investment community were awaiting preliminary decision by ITC judge in Gemstar-TV Guide International patent case that was believed imminent late Fri. (after our deadline) and was likely have future bearing on how interactive program guide (IPG) technology would be commercialized. ITC Administrative Law Judge Paul Luckern, who postponed earlier March deadline for decision, was to rule in case in which Gemstar claimed that EchoStar, Scientific-Atlanta (SA) and Pioneer had violated its patents for IPG and was likely determine whether company built momentum or suffered blow to status as key supplier of IPG technology. Luckern’s ruling will set stage for ITC to complete investigation by Sept. 23.
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EchoStar, SA and Pioneer all designed own IPGs for set-top boxes, and Gemstar filed complaint with ITC last year seeking to block import of satellite receivers it said contained IPG that infringed on its patents. Gemstar shares, which once traded as high as $100, have been under pressure in recent weeks as they sank to $10 range due in part to weakness at company’s TV Guide magazine business, but also because of perceived feud between CEO Henry Yuen and News Corp.’s Rupert Murdoch, whose company owns 42% of firm.
Ruling in Gemstar’s favor probably would mean that companies would have to design IPGs around its patents or sign licensing pact. Gemstar has attempted to show that companies violated 3 of its patents. While ruling in defendant’s favor could be “psychologically numbing,” it would “essentially maintain the status quo,” Deutsche Bank Securities analyst Karim Zia said in research note Fri. Gemstar already had “locked up” long-term IPG agreements with cable operators Charter Communications and Comcast, both of which presumably would buy STBs manufactured by either SA or Pioneer. Positive ruling could produce $11-$13 jump in Gemstar’s stock price, said Zia, who has $20 target for company’s shares. Banc of America securities analyst Douglas Shapiro has $31 target and forecast that favorable ruling would give “the stock a pop.”