So TiVo sued Verizon. Then Motorola sued TiVo in apparent retaliation (much like Microsoft sued TiVo after TiVo sued AT&T). Now TiVo is filing a counter suit against Motorola (as they did against Microsoft), and to top it off they’ve included Motorola customer Time Warner Cable in the new suit. There’s some high stakes legal poker going on here.

Tongue out of cheek, the timing is primarily due to the stay on the Motorola suit, which was in place while the AT&T & Microsoft cases proceeded as they involved the same patents, being lifted. As long as the case was stayed TiVo was under no pressure to file a counter suit, but not things are moving forward. TiVo announced the suit in a simple SEC filing:

On March 26, 2012, the Company filed an answer and amended counterclaims in response to a patent infringement suit that Motorola initiated against the Company in the Eastern District of Texas in 2011 that was stayed until earlier this year. In its response, the Company alleged counterclaims against Motorola and Time Warner Cable, one of Motorola’s customers, for infringing U.S. Patent Nos. 6,233,389, 7,529,465, and 6,792,195 owned by TiVo.

The full court filing has been posted on Scribd (thanks to Sam Biller):
TiVo files answers and amended counterclaims against Motorola & Time Warner Cable

The patents involved are the same core patents behind the EchoStar/DISH Network and AT&T settlements, as well as the ongoing case against FiOS. TiVo’s been successful so far, 2 for 2, so that’s a good sign. Time Warner Cable is the only remaining top five MVPD in the US that TiVo doesn’t have a business agreement or a legal settlement from. TiVo has business agreements with the top two, Comcast and DirecTV, and fifth place Cox Communications. Third place DISH Network settled with TiVo. That leaves TWC in fourth place, and many investors have wondered when TiVo would take some form of action against TWC if they didn’t come to an agreement.

These legal fights tend to drag on for years, so I’m not going to hold my breath waiting on any outcome just yet.

Well, as we know, AT&T settled with TiVo in January. Yet the spat with Microsoft continued. Microsoft even ratcheted things up after the settlement, filing a complaint with the International Trade Commission (ITC) seeking to block importation of TiVo units for sale within the US. EDIT: This was my bad – as I wrote this I was thinking the ITC complaint was filed in January 2012, when it was January 2011. The late hour probably had something to do with it, but either way I apologize for my mistake.

However, it seems that with the primary impetus for the fight removed both sides thought better of spending resources on the legal battles. In a terse SEC filing Thursday, TiVo announced that both sides had decided to dismiss their legal claims against the other. TiVo also explicitly stated that they’d granted no patent rights to Microsoft as part of the agreement:

On March 21, 2012, TiVo and Microsoft reached an agreement whereby Microsoft has agreed to dismiss all of its pending litigation against TiVo, including its action in the United States International Trade Commission and both of its cases in the United States District Court for the Northern District of California. In conjunction with these dismissals, TiVo has agreed to dismiss its counterclaim against Microsoft in the United States District Court for the Northern District of California. No patent rights were granted to Microsoft by TiVo.

That seems to be all either side has to say on the issue, I couldn’t find any mention of this from Microsoft.

This is good news for TiVo, it removes the distraction of these legal issues. And they were always a sideshow to the AT&T suit anyway. TiVo only filed against Microsoft as a defense to Microsoft filing against them. TiVo’s strategy has always been to go after the service providers, like AT&T and Verizon, and not their technology providers. (EchoStar was an exception since that whole legal saga started before DISH Network and EchoStar split into separate companies.)

AT&T has settled with TiVo, offering payments that will total at least $215 million, and potentially much more, in exchange for a mutual patent licensing deal. TiVo will receive $51 million up front, followed by recurring quarterly payments guaranteed through June 2018, for a total minimum payment of $215 million. In addition to these minimum payments, AT&T will pay recurring per-subscriber monthly license fees should the level of U-Verse subscribers exceed“certain levels”. Just what those levels are wasn’t revealed in the press release, but TiVo apparently expects the total payments to“significantly exceed” the minimums. In this case what’s good for AT&T is good for TiVo – the more subscribers they get, the more TiVo makes.

The Form 8-K TiVo filed with the SEC regarding this settlement reveals more of the details about the payments as well as the patents involved:

Under the Agreement, AT&T has agreed to pay TiVo a minimum amount of $215,000,000 (the “Payment to TiVo”) plus incremental monthly fees per DVR subscriber if the growth of AT&T’s subscriber base exceeds certain pre-determined levels. Based on currently available industry forecasts, TiVo expects that the total fees payable to it by AT&T under the Agreement will significantly exceed the guaranteed minimum Payment to TiVo. The first $51,000,000 of the Payment to TiVo is due on January 3, 2012 and the remaining amount is due to TiVo in equal installments 30 days after the end of each calendar quarter in the amount of $5 million for the first four calendar quarters and approximately $6.5 million in subsequent calendar quarters through the calendar quarter ending June 30, 2018. Any incremental additional per subscriber fees are due to TiVo on the same schedule.

Pursuant to the Agreement, TiVo granted AT&T a limited license under its advanced television patents, including the patents that TiVo had asserted against AT&T (U.S. Patent Nos. 6,233,389, 7,493,015 and 7,529,465), to make, have made, use, sell, offer to sell and import advanced television technology in connection with AT&T multichannel video programming services, including AT&T U-verse, subject to certain limitations and exclusions. AT&T granted TiVo a limited license under its advanced television patents, including the patents that AT&T had asserted against TiVo (U.S. Patent Nos. 5,809,492, 5,922,045, 6,118,976 and 6,983,478), to make, have made, use, sell, offer to sell and import advanced television technology in connection with TiVo products and services, including products and services provided to other multichannel video programming service providers, subject to certain limitations and exclusions.

We may learn more about the terms when TiVo files their Form 10-K after their fiscal year ends on January 31, 2012.

In addition to the settlement payments there is also the indirect benefit to TiVo in reducing their legal costs by no longer needing to pursue the suit. It also eliminates the distraction and allows their legal team to focus their efforts on Verizon. Speaking of Verizon, that’s where all eyes are now as they’re currently the sole remaining target for TiVo’s patent suits. With victories against EchoStar/DISH and now AT&T, it doesn’t seem unreasonable to expect Verizon to taking a serious look at their chances of victory and weighing it against the cost of a settlement. I fully expect TiVo to also be making a reinvigorated push to establish deals with the remaining US cable providers, such as Time Warner Cable, Cablevision, and Bright House Networks.

Taking a look at the top 10 US MVPDs (as of June 2011):

1. Comcast Corporation 22,525,000 – business relationship to allow VOD access to retail TiVo units, now in trials
2. DirecTV 19,433,000 – business relationship with licensing and new THR-22 DirecTiVo just released
3. Dish Network Corporation 14,056,000 – $500 million legal settlement and licensing
4. Time Warner Cable, Inc. 12,235,000 – no known agreement or licensing
5. Cox Communications, Inc. 4,838,000 – business relationship to allow VOD access to retail TiVo units, in development
6. Charter Communications, Inc. 4,413,000 – distributes TiVo directly to customers
7. Verizon Communications, Inc. 3,848,000 – ongoing patent lawsuit
8. AT&T, Inc. 3,407,000 – $215 million legal settlement and licensing
9. Cablevision Systems Corporation 3,284,000 – no known agreement or licensing
10. Bright House Networks LLC 2,139,000 – no known agreement or licensing

In addition, of course, TiVo is being distributed to customers of smaller cable MSOs Suddenlink (#11), RCN (#16), and Grande Communications (not in the top 25). Each victory, licensing deal, or business arrangement strengthens TiVo’s hand at the negotiating table. TWC, like Comcast, is large enough that they develop a lot of their technology and software in house. As such I don’t really expect them to adopt TiVo as their new platform, as Charter has. However, I would not be surprised to see them make a deal with TiVo to support VOD on retail TiVo units, just as Comcast and Cox have, in exchange for staying out of the legal crosshairs.

Verizon is more of a wildcard. They have a rocky track record when it comes to developing and releasing software updates for their FiOS STBs. And they have a small enough user base that outsourcing their software development to TiVo and benefiting from their economies of scale might benefit them. Their architecture is not all that different from Virgin Media in the UK and ONO in Spain. TiVo has already shown they can handle a hybrid cable/IPTV system with those networks, which is what FiOS is. To me that would be the ideal solution, as FiOS joining Team TiVo would increase development funding. And it is likely that they’d push the addition of features to match what they’ve implemented in house, which would benefit everyone. But they may also simply negotiate a licensing settlement like AT&T’s.

AT&T is pure IPTV and they’re using Microsoft software end-to-end. It was pretty much an impossibility that they’d adopt TiVo’s software for their STBs given the infrastructure they’re using. The licensing settlement is really the best result we could hope for in this case. Cablevision and Bright House could easily adopt TiVo as their next-generation STB platform. They’re smaller than Charter, who already has, and Suddenlink, also a TiVo user, is more than half as large as Bright House.

Oh, there is another reason I think TiVo will move more aggressively to establish deals with more MSOs on the back of this settlement: Google. More specifically Google’s pending acquisition of Motorola, the largest STB vendor for cable systems in the US, and Google TV. Back in August when I looked at the announcement, and specifically at the implications for TiVo, and then more recently in November, I stated that I full expect Google to bring the Google TV platform to Motorola STBs as a standard option.

More and more MSOs are looking at OTT (over-the-top) content to increase their competitiveness, which is a prime reason MSOs have turned to TiVo, and Google TV’s Android platform and apps would be a huge boon. Google has Sage TV to provide DVR technology and placeshifting, which also allows them to compete with EchoStar’s SlingLoaded offerings. They could build the streaming client into every Android phone and tablet sold, as well as Google+, that’s a very big stick – or carrot, depending on how you look at it. If Google’s acquisition of Motorola goes through, they will do this. I’m certain of it; it just makes too much sense.

But it will all take time, most likely a few years. The acquisition itself will take time. And then the work to port Google TV to Motorola HW and/or developing new HW to better support Google TV/Android needs to be done. Then they need to land MSO clients for the new HW/SW bundle, and get it deployed. It all takes time. And that time gives TiVo a window to expand their beachhead in the industry. Once an MSO has a significant deployment of TiVo HW and/or SW in the field they’re much less likely to walk away from that investment and adopt another platform.

I expect TiVo to redouble their efforts on the back of this victory. They may even have some deals in their back pocket to announce at CES this month. But for now they can celebrate one victory in an ongoing war.

A search menu includes a search input field and input characters rendered on a multi-dimensional displacement surface that rotates in response to a user input. A highlight region intersects the multi-dimensional displacement surface and highlights input characters while the input characters intersect the highlight region according to the rotation of the multi-dimensional displacement surface.

Don’t you love patent-ese? But perhaps the most interesting aspect are the images included with the patent. They show what looks very much like a TV Guide-style EPG for live TV.

AppleInsider uncovered the patent application, and they have some of the images posted in their write-up. It is easier to see them there than in the US Patent Office interface. Interestingly, the remote is meant to be a fairly intelligent device, with a display and local storage. It would download the EPG data so that you could take the remote with you and decide what to record, and then when you returned it to the device it would sync and setup the recordings. That seems pretty complex, and frankly of questionable utility, for a remote – but it does make more sense if the ‘remote’ could be a real iPod, doesn’t it?

The filing also includes a hybrid search which would search both the EPG data and the iTunes store for content – which sounds just like TiVo’s Universal Swivel Search, which searches the local EPG, as well as broadband content from TiVoCast and Amazon Unbox.

As with all patent applications, this doesn’t mean Apple is actually working on a product that does this, just that they had the idea and felt it was worth patenting – just in case they decide to do it, or someone else does and they want to collect licensing. But the lack of DVR functionality is the glaring omission from Apple TV, so many people expect that Apple will address that at some point.

Picked up from CNET News.com.

We are pleased the Federal Circuit found for us on Tivo’s hardware claims, but are disappointed in the Federal Circuit’s decision on the software claims. The decision, however, will have no effect on our current or future customers because EchoStar’s engineers have developed and deployed ‘next-generation’ DVR software to our customers’ DVRs. This improved software is fully operational, has been automatically downloaded to current customers, and does not infringe the Tivo patent at issue in the Federal Circuit’s ruling.

All DISH Network customers can continue to use their DVRs without any interruption or changes to the award-winning DVR features and services provided by DISH Network.

We intend to appeal the Federal Circuit’s ruling affirming the $94 million jury verdict.

Though it seems that TiVo doesn’t agree with DISH’s assessment regarding the injunction, based on a comment quoted by CNNMoney.com:

“EchoStar has made a series of statements over the years related to the infringement of the TiVo patents that turned out to be both false and misleading,” the company said in a statement. “At this point it doesn’t really matter what EchoStar says by way of further self-serving statements. It matters what the courts say – and the courts have spoken.”

TiVo’s law firm Irell & Manella LLP also took the opportunity to tout their roll in the ruling in a press release:

Feb 1, 2008 10:15 ET

Federal Appellate Court Upholds Irell & Manella’s $94 Million Patent Infringement Judgment for DVR Market Leader TiVo

Unanimous decision affirms all damage claims and a critical injunction against EchoStar for use of TiVo’s ‘time warp’ digital video recording technology; court sustains TiVo’s claims of validity and infringement

LOS ANGELES, Feb. 1 /PRNewswire/ — The U.S. Court of Appeals for the Federal Circuit in Washington, D.C. has upheld a $94 million ruling in favor of digital video recorder pioneer TiVo Inc. in its patent infringement suit against EchoStar Communications Corp.

Law firm Irell & Manella LLP represented TiVo in both the original trial and the appeal, and was joined on appeal by members of the Washington office of Wilmer Cutler Pickering Hale and Doer LLP and Ropes & Gray LLP.

In a unanimous ruling written by Judge William Bryson, the three-judge panel affirmed an April 13, 2006 jury verdict in Marshall, Texas that EchoStar had willfully infringed TiVo’s patent on its innovative “time-warp” technology for digital video recorders (known as DVRs). The appellate decision also upheld all damages claims against EchoStar, as well as a key injunction preventing EchoStar from using TiVo’s technology.

The appellate court also sent the case back to the district court to decide additional damages for the period the injunction was stayed pending appeal.

The court overturned a finding of infringement by the hardware used by EchoStar, which will have no practical effect on damages or the overall outcome.

The decision validates TiVo’s market-leading position as the first company to successfully and market a low-cost DVR product that allows consumers to pause, rewind, and fast-forward a live television program.

“This is gratifying for TiVo,” said Morgan Chu, the Irell lawyer who led TiVo’s trial team. “The courts have recognized that TiVo was the creator of a revolutionary technology, one that reshaped the entire home entertainment industry. The court’s strong affirmation of the patents will be a great boost to TiVo as it looks to continue to break new ground in creating marketing leading advancements.”

Irell has been representing Alviso-based TiVo since January 2000, when the market leader first came under attack from companies looking to profit from the DVR craze. The firm successfully defended TiVo in separate actions by both Gemstar and Pause Technology.

The 2006 trial in Marshall, Texas involved extensive testimony about complex technology and patent issues, though the jurors needed barely two hours of deliberations to reach a unanimous verdict.

TiVo was represented at trial by Irell attorneys Morgan Chu, Christine Byrd, Perry Goldberg, Ben Yorks, Andrei Iancu, Laura Brill, and Alexander Giza.

Note: Irell & Manella LLP is a full service law firm with approximately 200 attorneys in offices in Los Angeles and Newport Beach, CA. Founded in 1941, Irell is nationally recognized for its tax, entertainment, intellectual property, corporate and litigation practices. Irell was named the Number 1 U.S. law firm for intellectual property by Chambers Global in 2005 and 2006. The firm’s clients include Fortune 500 corporations, universities, and leading-edge entrepreneurial companies in aviation, life sciences and medical devices, telecommunications, gaming, finance, technology and consumer electronics, and entertainment. For more, visit www.irell.com.

From: Stephanie Colvin 310-203-7533 scolvin@irell.com

Source: Irell & Manella LLP

CONTACT: Stephanie Colvin of Irell & Manella LLP, +1-310-203-7533,
scolvin@irell.com

Web site: http://www.irell.com/

In sum, because of a failure of proof of literal infringement, we reverse the judgment of infringement of the hardware claims with respect to all of the accused devices. We remand for any further proceedings that may be necessary with respect to those claims. We affirm the judgment of infringement of the software claims with respect to all of the accused devices. Because the damages calculation at trial was not predicated on the infringement of particular claims, and because we have upheld the jury’s verdict that all of the accused devices infringe the software claims, we affirm the damages award entered by the district court.

The district court’s injunction was stayed during the course of these proceedings. The stay that was issued pending appeal will dissolve when this appeal becomes final. At that time, the district court can make a determination as to the additional damages, if any, that TiVo has sustained while the stay of the permanent injunction has been in effect.

TiVo issued a statement regarding the ruling:

“We are extremely pleased that the United States Court of Appeals for the Federal Circuit unanimously ruled in our favor in EchoStar’s appeal of the district court judgment of patent infringement, full award of damages and that the injunction, which was stayed pending appeal, was ordered to be reinstated. Today’s ruling is confirmation of the value of TiVo’s IP portfolio, which is in addition to the other benefits TiVo has to offer. TiVo can now continue to focus on its goal to drive greater distribution in both its stand alone and mass distribution efforts.”

This is certainly not the outcome EchoStar was hoping for, and it is all good news for TiVo. While EchoStar may try to appeal this ruling, I think it is more likely that they will quickly come to terms with TiVo on licensing of TiVo’s patents, to avoid having to disable EchoStar DVRs already in the field under terms of the injunction. I don’t think it is very likely that they will actually license the TiVo platform and use it on DVRs, as DirecTV did, but rather that they will license the patents so that they can use the IP in their own DVRs.

This ruling is not only good for TiVo for the damages, and licensing revenue, they’ll collect from EchoStar, but also because it strengthens their position when negotiating with other vendors. With the infringement ruling upheld, other DVR vendors are more likely to license TiVo’s patent portfolio, rather than face their own lawsuit. And it could encourage more cable MSOs to license TiVo’s OCAP software for their networks.

Certainly a good day for TiVo.

Thanks to reader Jason for the link to the PDF of the ruling.

EDIT: See follow-up post for additional comments on the case.

We are extremely pleased that the PTO has now found all claims of the Time Warp Patent to be valid after conducting a reexamination of the patent requested by EchoStar. This decision by the PTO is final and not appealable by EchoStar. Today’s decision by the PTO brings us another step closer to ending EchoStar’s continued infringement and we are hopeful that the United States Court of Appeals for the Federal Circuit will uphold the district court judgment of patent infringement and reinstate the injunction.

The affirmation of the patent is great news for TiVo. Not only does it settle any current uncertainty over the patent, but it makes it stronger going forward as it will be harder for any other party to have the patent re-examined in the future. This is likely to put more pressure on EchoStar to come to a settlement before the ruling on their appeal comes down. And it will also strengthen TiVo’s position should they pursue any other vendors for patent infringement.