TiVo’s Verizon Settlement Seen Putting Pressure on Motorola, Time Warner
TiVo’s patent infringement settlement with Verizon cuts short a trial set of November and increases the pressure on Google’s Motorola Mobility and Time Warner Cable to reach a similar accord, analysts said.
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Verizon agreed to pay TiVo a minimum of $250 million -- potentially more depending on future DVR subscription levels -- ending a three-year legal battle in which TiVo accused the carrier of infringing its so-called time-warp patent that’s at the heart of other recent multimillion-dollar settlements. TiVo will initially receive $100 million, with the remaining $150 million paid quarterly through July 2018. If the companies pursue commercial initiatives by year-end, up to $29.4 million in payments could be subject to a credit of an equal amount, the companies said.
TiVo earlier had separate settlements with EchoStar ($500 million) in 2011 and AT&T ($214 million) earlier this year. Motorola, which has Time Warner and Verizon as customers for cable set-top boxes, sued TiVo in February 2011. Motorola alleged TiVo infringed three patents, including those covering three patents, including those covering a DVR with archival storage and a method for implementing playback features for compressed video that were originally issued in 2001 and 1999 to Imedia Corp. TiVo responded by arguing that Motorola infringed three patents (CED March 27 p1), including the one for time-warp that allows for viewing one program while recording another. Another of the TiVo patents was for time-shifting multimedia content streams. A trial in the case is set for April 2013.
"Verizon has set a strong precedent for Motorola to settle,” Brean Murray analyst Todd Mitchell said. Such an agreement could be reached over the “next year or so,” Lazard Capital Markets analyst Barton Crockett said. Time Warner and Motorola officials weren’t available for comment.
In addition to potentially leading to other legal settlements, the Verizon agreement highlights the value of TiVo’s IP and should further reduce its legal expenses, BMO Capital Markets analyst Edward Williams said. TiVo incurred a combined $18.2 million in legal expenses in the last two fiscal quarters, including $12.8 million in Q2, much of which was tied to the Verizon case (CED Aug 31 p2).