Verizon Wins Temporary Stay On Payments To ActiveVideo

A federal appeals court Wednesday granted Verizon Communications' request to delay patent-royalty payments the telco was ordered to pay ActiveVideo Networks starting this week, and the court set an accelerated schedule to hear Verizon's appeal in the case.

The U.S. Court of Appeals for the Federal Circuit ruling came after a federal district court judge Monday denied Verizon's request for a stay on the payments to ActiveVideo -- whose biggest customer is Cablevision Systems.

ActiveVideo has until Dec. 22 to comment on the appeals court's order. Under the expedited briefing ruling, Verizon's opening brief is due Dec. 29 to the appeals court, and ActiveVideo's opening brief is due Jan. 26, 2012.

Under the federal appeals court ruling Wednesday, Verizon was ordered to post bond with the Virginia district court for each monthly payment during the appeals process.

In a statement, ActiveVideo said, "Verizon has been ordered to post a bond instead of paying the royalty in cash while the Federal Circuit Court of Appeals examines the issue. We are confident that they will uphold the original District Court decision and Verizon will soon have to pay royalties as ordered. We are also pleased the Federal Circuit chose to expedite the appeals process and are confident that the original jury's decision will be affirmed."

In an interview Monday, ActiveVideo president and CEO Jeff Miller said, "What we're seeking through the court is to stop the unlawful use of our technology. Right now, we want Verizon to stop using our technology."

Last month, Judge Raymond Jackson of U.S. District Court for the Eastern District of Virginia issued a permanent injunction effective May 23, 2012, ordering Verizon to stop using two patents owned by ActiveVideo.

Until the injunction goes into effect, Verizon was ordered to pay $2.74 per month per subscriber in royalties to ActiveVideo. With about 4 million FiOS TV subscribers at the end of September, Verizon would have to pay about $11 million per month.

Miller said Verizon will owe his company about $250 million in total by the time the permanent injunction goes into effect in May 2012.

The telco may be forced to disable FiOS TV's VOD and interactive widgets if it is unable to develop a workaround that does not use the ActiveVideo patents by next May.

In August, a federal jury in Virginia found Verizon's FiOS TV violated four of five patents asserted by ActiveVideo and awarded ActiveVideo $115 million in damages. Judge Jackson subsequently added at least $24.1 million in supplemental damages and interest to the amount Verizon must pay to ActiveVideo.

Verizon is appealing the Virginia court's injunction ruling, the damages awarded and the underlying decision of infringement to the federal appeals court.

San Jose, Calif.-based ActiveVideo has said it originally approached Verizon in 2005 about selling the telco its network-based interactive TV software.