AT&T to Pay TiVo $215M-Plus to Settle DVR Fight

TiVo Inc. (Nasdaq: TIVO)'s 2012 got off to a profitable start as it has settled its pending patent lawsuit with AT&T Inc. (NYSE: T), with the telco agreeing to pay the DVR pioneer at least $215 million through the middle of 2018.

Under terms of the out-of-court settlement announced Tuesday, TiVo said AT&T is on the hook for an initial payment of $51 million, followed by recurring quarterly guaranteed payments totaling $164 million through June 2018. The telco is also to pay incremental recurring per-subscriber monthly license fees through 2018 "should AT&T's DVR subscriber base exceed certain levels" that were not disclosed. AT&T ended the third quarter of 2011 with 3.6 million U-verse TV subscribers.

To top it off, AT&T agreed to dismiss all pending litigation between the companies with prejudice, with each side also entering a cross-license deal for their respective patent portfolios in the area of "advanced television."

TiVo sued AT&T and Verizon Communications Inc. (NYSE: VZ) in August 2009 over claims that they were 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").

Why this matters
For AT&T, settling with TiVo will allow it to avoid a drawn-out, possibly even more expensive lawsuit akin to the one between TiVo and Dish Network LLC (Nasdaq: DISH) and EchoStar Corp. LLC (Nasdaq: SATS). TiVo and Charlie Ergen & Co. finally agreed to a $500 million settlement last May. AT&T also avoids the risk of possibly having to disable millions of DVRs if it were to lose to TiVo. (See Dish May Have to Disable Millions of DVRs .)

The settlement with AT&T represents another win for TiVo and, based on its new track record, could put the company on a course for additional settlements or dismissals as it still has similar, pending suits underway against Verizon and two AT&T tech partners, Microsoft Corp. (Nasdaq: MSFT) and Motorola Mobility LLC .

For more
Bone up on the TiVo litigation chronicles.

• Dish, EchoStar to Pay TiVo $500M to Settle Suit
• TiVo Suit Targets AT&T & Verizon
• Microsoft Takes On TiVo
• Microsoft Sues TiVo Again
• TiVo: AT&T and Verizon Won't Strike a Deal

— Jeff Baumgartner, Site Editor, Light Reading Cable