TiVo Patent Lawsuit against Verizon Ends in $250.4 Million Settlement
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UPDATED: Sep 26, 2012
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Digital recording company, TiVo, maker of the original DVR, settled their pending patent infringement lawsuit against Verizon Communications this week for $250 million, in an effort to protect its intellectual property.
Both TiVo and interactive television company, ActiveVideo Network, have recently brought suit against Verizon claiming that Verizon’s FiOS DVR system violates their established patents. ActiveVideo settled with an agreement to share their license with Verizon as long as the Telecom giant pays ActiveVideo $2.74 per FiOS system sold.
Likewise, TiVo and Verizon entered into a patent licensing and commercial arrangement wherein Verizon will pay TiVo one initial cash payment of $100 million; an installment of payments through 2018 coming to an additional $150.4 million; and Verizon will pay a pre-determined amount in license fees per each Verizon DVR subscriber for the next six years, according to the settlement press release. The trial was set for October, but will no longer take place.
TiVo Sues Other Companies for Patent Infringement – And Wins
Many digital companies are becoming involved in intellectual property litigation in recent years. Some are staking their claims to property they have developed, others are facing legal consequences of overstepping their rights under U.S. patent laws. TiVo is among those benefiting from a slew of patent lawsuits.
In 2009 TiVo sued DISH Network and EchoStar for the same DVR patent infringement and in 2011, the case settled with a $500 million agreement. Then, earlier this year, TiVo filed suit against AT&T. Much like Verizon, AT&T will pay an initial $51 million and incremental payments to total $215 million, as well as ongoing license fees.
As TiVo’s stocks reportedly increase as a result of successful litigations, some would argue that the company is resting on past laurels and staying afloat on lawsuit settlements in an otherwise questionable state of business. But even so, their rights to benefit from past inventions remain upheld under well-established patent laws.
Intellectual Property Rights of a Patent Holder
As new and old digital and telecom companies seek to become or remain competitive, it is becoming commonplace for many of them to repackage and distribute existing technologies. This is where intellectual property law comes into play; it exists to uphold the integrity of one company’s hard work and encourage others to further their efforts to generate new, original inventions.
When a firm or person licenses an idea and obtains a patent from the United States Patent and Trademark Office (USPTO), they are required to disclose details of the invention regarding how to manufacture and operate it for all to see. However, the patent extends legal discretion to the holder over who, how and when another can recreate their work. In other words, TiVo would be well within its rights to refuse use of DVR technology to any other firm. But by sharing its license to sell DVRs for a fee, the company retains the deserved profits from manufacturing of the digital video recorder.