Video services

Patent Power

12:55 PM -- ActiveVideo is giddy about giving Verizon Communications Inc. (NYSE: VZ) a beatdown in the courts, but the cloud TV software maker says it won't get drunk on the power it now holds within its patent portfolio. In other words, don't expect ActiveVideo to emerge as second coming of Gemstar International and sue everything that moves. (See Verizon & ActiveVideo Call a Cease-Fire and How the Courts Came Up With Verizon's $2.74 FiOS TV Tax .)

For those not familiar with Gemstar, a company that's now part of Rovi Corp. , it was a notoriously litigious electronic program guide specialist run by the infamous Henry Yuen. They're a kinder, gentler sort now. But don't cross them, if you know what's good for you.

ActiveVideo prefers to sell products based on their own merits rather than resorting to litigation, says CEO and President Jeff Miller. In fact, the company was only pushed into the fray after Verizon sued Cablevision Systems Corp. (NYSE: CVC), ActiveVideo's biggest customer. (See Cablevision Still at Risk in Verizon Patent Fight .)

Still, the patent victory over Verizon could persuade others to license ActiveVideo's platform instead of working around it. (See Cisco & ActiveVideo Go Steady.)

"As a small company, taking on an IP [intellectual property] fight with a company like Verizon is pretty consuming," Miller says. "One thing that IP victory does is make our customers know that our patents cover our platform, and that we own the rights to our platform. Our business is about selling software; we're not an IP licensing house."

While ActiveVideo has no intention of getting sue-crazy and isn't actively seeking litigation targets, it will protect its IP "as it becomes necessary," Miller warns.

But it would rather spend its resources trying to increase market share. ActiveVideo has been plugging away for more than two decades, and the fruits of that work is finally starting to blossom. Thanks to deals with Cablevision, Grande Communications , and Ziggo B.V. , a trial with Comcast Corp. (Nasdaq: CMCSA, CMCSK), and a budding consumer electronics strategy, ActiveVideo's technology is now in more than 10 million homes. And that number is poised to expand, as the vendor has a few other deals that are still under wraps, according to Miller. (See ActiveVideo Breaks In at Comcast and Ziggo Picks ActiveVideo.)

— Jeff Baumgartner, Site Editor, Light Reading Cable

AESerm 12/5/2012 | 5:19:40 PM
re: Patent Power

Whenever these patent stories pop up -- or memories of previous cycles as per Gemstar -- I wonder about correlation between economy and litigation. For what it's worth: Just spotted one law review article saying drops in GDP and NASDAQ lead to more patent disputes; increases in T-bill rates and large-scale economy risk lead to fewer. 

craigleddy 12/5/2012 | 5:19:39 PM
re: Patent Power

That's an interesting analysis but, no matter what the state of the economy, I've gotta think that things are going to get worse with patent litigation. Companies are getting patents for all sorts of things and lawyers eagerly will help them to protect their turf.

In an emerging area like ACR (automatic content recognition), companies are stacking up patents. I don't know how anyone can figure out where one company's patent ends and another begins.

Litigation is an ordeal, but a small company can make more money on a legal victory or settlement than they can on their products. Gemstar's patent war eventually hit a brick wall and helped lead to the downfall of its leadership, but it turned an obscure company into an industry giant.     

craigleddy 12/5/2012 | 5:19:37 PM
re: Patent Power

The NY Times today has a front-page story on The Patent, Used as a Sword, talking about "how companies are using patents to stymie innovation." Click the headline here to read it (might require a subscription?). 

Jeff Baumgartner 12/5/2012 | 5:19:30 PM
re: Patent Power

Good one. These days, TiVo has sort of taken up the mantle of Gemstar and had some success with its litigation strategy, though TiVo only sues every other thing that moves, so I can't quite put them in the Gemstar echelon just yet. JB

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