AT&T Settles with TiVo, Agrees to Pay $215 Million to End Patent Infringement Lawsuit

TiVo's (News - Alert) patent infringement battle against pay TV providers cleared another hurdle on Tuesday when AT&T agreed to pay the digital video recording (DVR) specialist at least $215 million to settle an intellectual property lawsuit.

Under the terms of the agreement, AT&T (News - Alert) will pay TiVo a $51 million lump sum and recurring quarterly payments over the next six years, totaling $215 million. However, AT&T will be forced to add to the payments if the company sees a surge in its U-Verse televisions subscribers.

TiVo launched the first commercially-viable DVR back in 2007, and soon saw many pay TV providers follow suit with similar offerings. The company has spent many years in the courtroom since, looking for damages stemming from patent infringement claims.

California-based TiVo got its first major win in May of last year, when Dish Network and former parent company EchoStar agreed to pay TiVo $500 million to settle a seven-year patent infringement lawsuit.

Interesting, AT&T will pay actually end up paying TiVo a greater sum per subscriber than Dish and EchoStar, considering U-Verse has around 10 million fewer customers than Dish, according to the Associated Press. AT&T has agreed to pay TiVo around $60 per subscriber, compared to just the $36 per customer for Dish.

TiVo CEO Tom Rogers (News - Alert) told the AP that AT&T's aggressive, DVR-focused marketing campaign was the main reason for the difference.

"From the get-go, their offering was primarily based on DVR," he said, adding that Verizon and its FiOS (News - Alert) service may be the next legal target.

The agreement between TiVo and AT&T settles all outstanding litigation and includes patent-licensing deal, whereby each company can cross-license each other's intellectual property.

After several down years in a row, TiVo added a net of 117,000 subscribers in its fiscal third quarter, powered mostly by partnerships with cable and satellite providers. TiVo shares jumped nearly 13 percent in after-hours trading on Tuesday following the release of the news.

"This settlement, on the heels of our recent operational success that has resulted in the growth of TiVo's overall subscriber base, is another major accomplishment for TiVo and we believe a great outcome for our shareholders," Rogers noted in a statement.

Beecher Tuttle is a TMCnet contributor. He has extensive experience writing and editing for print publications and online news websites. He has specialized in a variety of industries, including health care technology, politics and education. To read more of his articles, please visit his columnist page.

Edited by Rich Steeves