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TiVo Sues Samsung (Updated)

TiVo rekindled its litigation strategy Tuesday by filing a patent infringement suit against Samsung in the Eastern District of Texas.

TiVo, which announced the suit as it announced fiscal second quarter results, said the complaint centers on four patents, including two that have been litigated previously (its ‘389 Time Warner patent and ‘195 Trick Play patent), as well as two patents that are related to the '389 patent “but have expiration dates further into the future.”

“Today's action should help address one of the questions regarding the value, breadth, and applicability of TiVo's IP portfolio post the 2018 expiration of the '389 patent,” TiVo president and CEO Tom Rogers said, in a statement.

Update: In an interview, Rogers said the two latter patents, which have not been litigated, have a patent license that extends to 2023. He said TiVo’s core patent portfolio, of which there are hundreds, have an average duration of 13 years. 

TiVo’s legal assault on Samsung, a provider of set-tops to U.S. operators such as Time Warner Cable and Cablevision Systems and a top maker  of video-capable tablets and smartphones, comes after TiVo had successfully settled several other lawsuits. In June 2013, TiVo announced it would get an upfront lump-sum payment of $490 million to settle pending patent litigation with Motorola Mobility (then part of Google) and Cisco Systems, while also settling its suit against Time Warner Cable. TiVo had previously raked in more than $1 billion from past settlements with Dish Network, AT&T and Verizon Communications.

“People know that we have quite a track record when it comes to our litigation and they also know that we don’t pursue these things unless we believe there is significant damage opportunity," Rogers said. 

On the subscriber front, TiVo improved its retail stance while continuing to build its base through MSO partnerships.

TiVo added 37,000 TiVo-owned gross adds in the quarter, up 37% year-on-year, while net additions dropped 3,000, narrowed from a year-ago loss of 2,000 net additions. TiVo also added 284,000 subs through MVPD/MSO partnerships, about what it added in the quarter in the year-ago period.

TiVo ended its fiscal Q2 with 6.03 million total subs (941,000 TiVo-owned, and 5.09 million through MSO partners).

Rogers chalked up TiVo’s latest retail momentum on its whole-home platform, which includes the TiVo Mini. Also playing a part is the growth of streaming services that enable some consumers to build their own bundles in a way they hadn’t necessarily had before, he said. 

Rogers wouldn't shed much light on Bolt, the brand for TiVo's next-gen platform, but acknowledged that there's something new in the works. “I won’t deny that we're going to be introducing a new retail product over the course of the quarter at some point," he said. 

On the financial side, TiVo pulled in service and software and technology revenues of $99.1 million, above it’s guided range of $94 million to $97 million, and improving on $86.6 million in the year-ago quarter. Revenues at Digitalsmiths, TiVo's video search and recommendation unit acquired in 2014, grew 65%.

Net income was $8.3 million, compared to guidance of $7 million to $10 million, but down from $9.3 million in the same quarter last year, which did not include $3.5 million consisting of $1.7 million of non-cash amortization and transfer tax expenses from TiVo’s recent acquisition of Cubiware and tax adjusted interest of $1.8 million from its 2% convertible notes issued in September 2014. Excluding those items, Non-GAAP net income grew 28% to $11.9 million compared to the year ago quarter, TiVo said.