Video services

Verizon Slapped With Injunction Over FiOS TV

Verizon Communications Inc. (NYSE: VZ) has been told to pay $2.74 in royalties per month for each FiOS TV customer to ActiveVideo starting December following an injunction granted Wednesday by a U.S. District Court judge that orders the telco to "cease and desist" using intellectual property belonging to the vendor.

Judge Raymond A. Jackson on Wednesday ordered the injunction to become effective May 23, 2012, though monthly royalty payments will begin on Dec. 1, 2011.

Verizon ended the third quarter with about 4 million FiOS TV customers, meaning it would have to pay as much as $11 million each month during the six-month period.

Judge Jackson wrote that the court will not stay the injunction pending appeal, but noted that Verizon has told the court that it would take six to nine months to implement a "non-infringing alternative." Verizon has been discussing a design-around since March 2011, so six months should give it ample time to implement it, Jackson added.

ActiveVideo has already been awarded $139.1 million in damages in the case after a jury ruled that Verizon infringed on the four ActiveVideo patents linked to the case:

  • No. 6,034,678 -- "Cable Television System With Remote Interactive Processor"
  • No. 5,550,578 -- "Interactive And Conventional Television Information System"
  • No. 6,100,883 -- "Home Interface Controller for Providing Interactive Cable Television"
  • No. 6,205,582 -- "Interactive Cable Television System with Frame Server"

Update: According to the order, ActiveVideo asked the court (on Aug. 12) to enjoin further use of only the '578 and '582 patents in connection with Verizon's video-on-demand service delivered via the FiOS TV platform.

"Throughout this process, the Court has consistently upheld the rights of ActiveVideo Networks to its patented technology. We believe it is well past time for Verizon to comply with the Court's decision, and to cease its unlawful and unauthorized use of our intellectual property," ActiveVideo CEO Jeff Miller said, in a statement.

Verizon was not immediately available for comment Wednesday evening.

Why this matters
This case shows how careful service providers need to be about their content delivery strategies: In a market with razor-thin margins, additional operating costs can make a real difference regarding the commercial viability of a service.

The case also shows how great the rivalry is between the telco and cable worlds. The injunction marks the latest legal chapter between Verizon and ActiveVideo, which counts Cablevision Systems Corp. (NYSE: CVC) -- a cable operator that competes with the telco in the New York area -- as its largest customer and licensee.

In a separate case, Verizon is seeking an injunction that would prevent Cablevision from importing some Cisco-made set-tops that, the telco claims, infringe on some Verizon patents.

For more
Get caught up on the twist and turns in both cases:

— Jeff Baumgartner, Site Editor, Light Reading Cable

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