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Verizon Pays to Settle FiOS Patent Lawsuits

Verizon Communications will shell out more than half a billion dollars to settle two separate patentinfringement lawsuits related to FiOS TV.

The telco will pay $260 million to ActiveVideo Networks, whose largest customer is Cablevision Systems, plus an unspecified additional amount to settle the interactive TV vendor’s two-year-old patent litigation.

Separately, Verizon reached an out-of-court settlement with TiVo, under which Verizon will pay the DVR company at least $250 million over the next six years. In addition, the companies are exploring the distribution of the Internet video streaming service being developed by Verizon’s joint venture with Redbox to TiVo retail DVRs.

Verizon said it was “pleased” to have reached the settlements with TiVo and ActiveVideo. But by all appearances, the tech companies that won the big paydays were even more pleased.

The Verizon settlement “underscores the significant value our distribution partners derive from Ti- Vo’s technological innovations and our shareholders derive from our investments in protecting TiVo’s intellectual property,” TiVo CEO Tom Rogers said in a statement.

Last year, TiVo reached a patent settlement with satellite-TV provider Dish Network for more than $600 million, followed by a deal with telco AT&T for as much as $300 million.

TiVo has lawsuits still pending against Time Warner Cable, Cisco Systems and Motorola Mobility (now owned by Google) — and the DVR company’s recent string of legal victories indicate those companies will end up settling, too, according to Jefferies & Co. analyst Brian Fitzgerald.

In addition to the guaranteed $250 million, Verizon also will pay TiVo monthly license fees through July 2018 for each Verizon DVR subscriber in excess of certain predetermined levels.

In the ActiveVideo case, the Verizon settlement came after the U.S. Court of Appeals for the Federal Circuit in August upheld a decision ordering Verizon to pay past damages as well as future royalties.

ActiveVideo initiated its suit against Verizon in May 2010 after the telco sued Cablevision and brought a complaint before the U.S. International Trade Commission alleging the MSO violated several telco-owned patents. The ITC last fall rejected Verizon’s claims.

ActiveVideo doesn’t expect to engage in other patent litigation or try to license the patents, president and CEO Jeff Miller said. “The patents simply tell the world and the court system that we do own our technology, that it’s strong technology and it’s innovative,” he said.