GEMSTAR VOWS TO FIGHT ON DESPITE DEFEAT AT ITC
Defiant executives at Gemstar TV Guide International vowed Mon. that their company would “ultimately prevail” in its patent dispute despite ITC administrative law judge’s June 21 finding that 3 of its patents covering interactive program guides (IPGs) hadn’t been infringed upon. Gemstar Gen. Counsel Jonathan Orlick said while Judge Paul Luckern ruled that EchoStar, Pioneer and Scientific-Atlanta (SA) could continue importing satellite receivers and set-top boxes, finding was “only initial step” in legal battle that’s likely result in case ultimately moving to U.S. Appeals Court, D.C.
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Gemstar will file petition for review by full ITC within 10 days and expects decision within 45 days, Orlick said: “It’s important to keep in mind that this is just an initial step and the final decision on the merits of the patents must come from the federal district appeals court where we believe the chance of reversal is high. He estimated appeal won’t be decided for 12-18 months. “We have a strong and deep patent portfolio that is constantly expanding though our innovation,” he said.
Addressing questions from analysts and investors in conference call Mon. about Gemstar’s litigious reputation, CEO Henry Yuen denied company “depends on litigation to build its business.” With 180 licensees, Gemstar “litigates only when we feel there is a need to protect our intellectual property [IP],” he said. It currently has separate infringement case involving same 3 companies in U.S. Dist. Court, Atlanta. In past, Gemstar has sued United Video Satellite, company that it later merged with through acquisition of TV Guide, and StarSight Telecast, which it purchased in 1997.
Luckern’s ruling will have little impact on Gemstar’s IPG deployment agreements with AT&T, Comcast and Charter, all of which carry minimum license fees, analysts said. Pacts require cable operators to deploy specific number of STBs containing guide in order to qualify for lower per-subscriber monthly royalty fees, analysts said. Yuen conceded that MSOs had “financial incentive” to deploy Gemstar’s IPG that’s rooted in lower royalty fees and share of ad revenue.
In responding to reports of clashes with News Corp.’s Rupert Murdoch, whose company has 42% stake in Gemstar, Yuen said he was “committed to running this company.” Gemstar “always has discussions” with Murdoch, he said, and “we have agreements and some disagreements, but none of them have to do with corporate governance.” News Corp. acquired stake in Gemstar though purchase acquisition of TV Guide in July 2000. Since then, Gemstar’s stock has tumbled from high of $100 to 52-week low of $4.86 in early Mon. trading, recovering to $4.90 later in day.