AT&T to pay TiVo $215 million through 2018 to settle patent lawsuit

AT&T has settled a patent lawsuit with TiVo in which it will pay the DVR vendor $215 million through June 2018, including an initial payment of $51 million. AT&T will also pay “incremental recurring per subscriber monthly license fees” to TiVo through July 2018 if its subscriber base surpasses a certain level, TiVo said in a statement Wednesday. AT&T and TiVo were locked in a patent battle after AT&T began to market its own digital video recorder using a technology patented by TiVo. TiVo also recently settled similar lawsuits with Dish Network and EchoStar Corp. Read on for more.

“We are extremely pleased to reach an agreement with AT&T, which acknowledges the value of our intellectual property,” said Tom Rogers, CEO and President of TiVo. “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. 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 IP enforcement efforts.”

Rogers continued, “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.” TiVo’s full press release follows below.

TiVo Announces Settlement of Patent Litigation With AT&T; TiVo and AT&T Enter Into a Patent Licensing Arrangement

ALVISO, CA — (Marketwire) — 01/03/2012 — TiVo Inc. (NASDAQ: TIVO) announced today that it has settled its pending patent litigation with AT&T and that the companies have entered into a mutual patent licensing arrangement. 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, which together yield minimum payments of $215 million. In addition to these minimum payments, AT&T will pay incremental recurring per subscriber monthly license fees through July 2018 should AT&T’s DVR subscriber base exceed certain levels.

As part of the settlement, TiVo and AT&T agreed to dismiss all pending litigation between the companies with prejudice. The parties also entered into a cross license of their respective patent portfolios in the advanced television field.

“We are extremely pleased to reach an agreement with AT&T, which acknowledges the value of our intellectual property,” said Tom Rogers, CEO and President of TiVo. “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. 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 IP 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.”

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