Verizon Communications Inc. (NYSE: VZ) has redesigned its FiOS video-on-demand (VoD) system as the telco tries to work around two ActiveVideo patents that are central to a lawsuit involving the two companies.

"FiOS customers have seen -- or will soon see -- a message on their guides regarding maintenance related to this redesign," Verizon spokeswoman Heather Wilner said, confirming a FierceCable report that installations of the redesign are underway. She said the new software's already been installed in a few markets and will be extended to all FiOS regions "over the next month."

Verizon is working with its VoD vendors -- Cisco Systems Inc. (Nasdaq: CSCO) and Ericsson AB (Nasdaq: ERIC) -- on the VoD system redesign.

ActiveVideo is hopeful, but not convinced, that Verizon's redesign will sidestep its patents. "Once we gain access to the new system and evaluate it we will decide if filing a contempt motion is warranted," said President and CEO Jeff Miller, in a statement to Light Reading Cable.

Why this matters
The redesign is an important milestone in ActiveVideo's litigation against Verizon, though the workaround remains subject to the court's review and approval. Per a permanent injunction set to take effect May 23, Verizon's been on the hook to pay ActiveVideo about $11 million in royalty payments, but a federal court granted a temporary stay last year that gave the telco time to develop the workaround.

Counting earlier judgments, ActiveVideo has estimated that Verizon owes the vendor up to $250 million, but the telco has not paid a dime to the vendor as it appeals the injunction and patent infringement judgments.

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— Jeff Baumgartner, Site Editor, Light Reading Cable