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AT&T To Pay TiVo At Least $215 Million To Settle Patent Lawsuit

TiVo has settled its pending patent lawsuit against AT&T, under which the telco will pay a minimum of $215 million through June 2018, TiVo announced Tuesday.

Under the terms of the settlement, AT&T agreed to pay TiVo an initial payment of $51 million, followed by recurring quarterly guaranteed payments through June 2018, totaling $164 million. In addition to those minimum payments, AT&T will pay incremental recurring per subscriber monthly license fees through July 2018 in the event that AT&T's DVR subscriber base exceeds certain levels.

"Based on currently available industry forecasts, TiVo expects that the total fees payable to it by AT&T under the agreement will significantly exceed the guaranteed minimum payment to TiVo," TiVo said in an 8-K filing with the Securities and Exchange Commission.

TiVo and AT&T agreed to dismiss all pending litigation between the companies with prejudice as part of the settlement. In addition, the companies entered into a cross-licensing deal covering their respective patent portfolios in the advanced TV field.

AT&T declined to comment.

In May 2011, TiVo reached a landmark $500 million settlement with Dish Network, after seven years of litigation. The key patent at issue was TiVo's Time Warp patent, U.S. Patent No. 6,233,389, which covers the simultaneous playback and recording of TV programming.

The trial in TiVo's litigation with AT&T was scheduled to begin this month in the U.S. District Court for the Eastern District of Texas. TiVo also has litigation pending with Microsoft, Verizon Communications and Motorola Mobility.

TiVo sued AT&T and Verizon in August 2009 alleging infringement of the Time Warp patent as well as two other TiVo-owned patents: U.S Patent Nos. 7,529,465 ("System for Time Shifting Multimedia Content Streams") and 7,493,015 ("Automatic Playback Overshoot Correction System").

"We are extremely pleased to reach an agreement with AT&T, which acknowledges the value of our intellectual property," TiVo president and CEO Tom Rogers said in a statement. "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 continued, "The combination of guaranteed payments and future additional fees paid to TiVo in the event that AT&T's pay TV business continues to grow in-line with consensus analyst expectations, represents hard-earned compensation for our [intellectual property] enforcement efforts. The settlement also provides us rights to innovate TiVo products and services under license from AT&T and allows us to avoid significant legal expenses that we expect would have been incurred by us during and after trial."