Verizon to Pay TiVo $250 Million to Settle DVR Spat

It will also pay more than $260 million to ActiveVideo for patent claims

By Christopher Freeburn, InvestorPlace Writer

Verizon Communications (NYSE:VZ) has settled a lawsuit with TiVo (NASDAQ:TIVO) and ActiveVideo Networks over patent infringement claims arising from technology used in its FiOS subscription TV service.

Under the terms of the settlement, Verizon will pay TiVo $250.4 million, while ActiveVideo Networks will get $260 million, plus additional, unspecified payments, Bloomberg noted.

Redbox, Verizon Challenge Amazon, Netflix
Redbox, Verizon Challenge Amazon, Netflix

TiVo will receive an upfront $100 million payment in cash. Verizon will make quarterly payments through July 2018 for an additional total of $150.4 million. TiVo will also receive licensing fees for its DVR technology used in FiOS.

ActiveVideo has agreed to cross-license its patents with Verizon as part of the settlement.

Shares of Tivo rose more than 3% in Monday mid-day trading, while Verizon shares were flat.

The two digital-video-recording (DVR) services sued Verizon, claiming that its FiOS DVR system infringed on patents held by the two companies. The case was to begin trial on October 1.

Last month, a U.S. Appeals Court affirmed a jury verdict against Verizon in ActiveVideo’s favor. Under the lower court’s ruling, Verizon was forced to pay ActiveVideo $2.74 per FiOS subscriber each month.

If TiVo and ActiveVideo had prevailed in court, Verizon might have been compelled to drop DVR service from FiOS, a substantial blow to the service, which produced $40.7 billion in revenue in 2011.

Last year, TiVo settled a similar patent infringement suit with Dish Network (NASDAQ:DISH). The company is currently pursuing patent violation lawsuits against Google‘s (NASDAQ:GOOG) Motorola and Cisco Systems (NASDAQ:CSCO) over cable boxes manufactured for Time Warner Cable (NYSE:TWC).

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