In all, TiVo says it has now raked in a total of $1.6 billion from patent settlements.
A brief history of the TiVo patent wars: the company filed suit against EchoStar in 2004, and the lawsuit went through an East Texas jury trial (that TiVo won), a host of appeals, and disputed software design-arounds. Facing an injunction that could have actually shut down many of its DVRs, EchoStar settled for $500 million in 2011. Then, as recounted by The American Lawyer, more settlements rolled in: AT&T paid $215 million in January 2012, and Verizon paid $250 million eight months later.
Those settlements, which include future royalties, were also reached right before trial. The whole time, TiVo has been represented by Irell & Manella partner Morgan Chu, who is something of a legend in patent litigator circles, as well as other top patent firms.
Motorola was a huge target for TiVo. The upcoming trial was going to be focused on DVRs that Motorola makes for Time Warner Cable, but Motorola also supplies DVRs for Comcast, the nation's biggest cable company. Motorola was planning to counter with its own patents claiming that it, not TiVo, was actually first to invent the DVR.
TiVo is an interesting case of a company aggressively using its patents. Many corporations (like Alcatel-Lucent) get assertive in areas they're no longer competing in so that maintaining relationships isn't an issue. TiVo, by contrast, has been actively selling its DVRs the whole time.
And TiVo is generally recognized as an early innovator in the field. But the company was outfoxed in the marketplace by cable companies that got into the DVR business on their own with a different payment model. Rather than spending a few hundred dollars on a DVR, many consumers were attracted to an alternative offered by their respective cable companies: pay several dollars a month to just lease a DVR.
The question is, now that TiVo has won its patent wars, what will it do now? $490 million is a huge amount to get for a patent case. The company president has boasted that today's settlement "enhances our already strong balance sheet," with TiVo holding more than $1 billion in cash, not including $400 million expected from payments still expected based on earlier patent settlements.
But TiVo can only live so long off that pile of patent cash. The company's non-patent operations have lost money for many years, and as big as this settlement is, it's actually less than analysts were expecting, notes Bloomberg. TiVo's stock was down 17 percent in morning trading.
