TiVo: AT&T and Verizon Won't Strike a Deal
TiVo Inc. (Nasdaq: TIVO)'s litigation strategy involving its patent portfolio is pretty simple: If you're a major multichannel service provider and refuse to do a deal with the DVR specialist, you risk getting your pants sued off.
In the wake of its protracted legal skirmish with Dish Network Corp. (Nasdaq: DISH) and EchoStar Corp. LLC (Nasdaq: SATS), TiVo is now taking aim at Verizon Communications Inc. (NYSE: VZ) and AT&T Inc. (NYSE: T), suing those telcos over claims they're infringing on three TiVo patents: 6,233,389 B1 ("Multimedia Time Warping System"), 7,529,465 B2 ("System for Time Shifting Multimedia Content Streams"), and 7,493,015 B1 ("Automatic Playback Overshoot Correction System").
TiVo filed the complaints in the U.S. District Court, Eastern District of Texas, which is the same court that hammered Dish and EchoStar. (See TiVo Suit Targets AT&T & Verizon.)
While TiVo's battle with Dish centers primarily on software and the Time Warping patent, these new allegations against Verizon and AT&T also address some hardware-related claims.
During Wednesday's second-quarter earnings call, TiVo CEO Tom Rogers said litigation was the only option at his company's disposal after it became clear Verizon and AT&T had no intention to strike deals that would give them access to TiVo's intellectual property. (See TiVo Posts Q2.)
He claimed TiVo made multiple attempts to come to a commercial arrangement with AT&T and Verizon, but "they were not reached."
"Unfortunately there are multichannel operators that compete with us through the unauthorized use of our intellectual property," Rogers said, noting that TiVo is seeking undisclosed financial damages for alleged infringement and a permanent injunction -- a similar situation to that sought in the ongoing TiVo-Dish DVR patent battle. (See TiVo-Dish DVR Slugfest Rages On , Another Round to Charlie Ergen & Co?, and TiVo Wants Ergen to Dish Out $1B .)
By comparison, DirecTV Group Inc. (NYSE: DTV), Comcast Corp. (Nasdaq: CMCSA, CMCSK), Cox Communications Inc. , and RCN Corp. , which are all playing ball with TiVo through licenses and distribution deals, have managed to avoid TiVo's litigious fury. (See RCN Makes TiVo Its Dominant DVR and Cox Tees Up TiVo Test Bed .)
On Wednesday's call, several analysts quizzed Rogers on why TiVo proceeded with a suit against AT&T and Verizon before its case with Dish and EchoStar is finally resolved. Dish and EchoStar are appealing the case, and a court hearing on that matter isn't expected to take place until this November. Rogers said only that "we believe that this action at this time makes sense."
He was also asked why Time Warner Cable Inc. (NYSE: TWC), which still has no deals with TiVo yet, and set-top makers such as Motorola Inc. (NYSE: MOT) and Cisco Systems Inc. (Nasdaq: CSCO), have not been targeted by TiVo's legal team.
Rogers said TiVo "has had ongoing conversations with Time Warner… There are many ways to craft an arrangement that is beneficial to us and the cable operator." But he declined to comment further on TiVo's possible litigation strategies involving set-top makers, other than to stress that TiVo's strategic "focus" has been to pursue relationships with multichannel distributors.
Both AT&T and Verizon declined to comment on the TiVo lawsuits.
Verizon has about 2.5 million FiOS TV subs, while AT&T has about 1.6 million U-verse video customers.
— Jeff Baumgartner, Site Editor, Cable Digital News
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