AT&T to Pay TiVo at Least $215 Million to Settle DVR Suit

TiVo has negotiated a settlement with AT&T that will net the digital video recorder (DVR) pioneer at least $215 million over the next six years. As part of the settlement, TiVo and AT&T will enter into a patent cross-licensing agreement and dismiss all pending litigation. TiVo first sued AT&T in August 2009 after winning a similar claim against Dish Networks. Yet another suit against Verizon is still pending.

"We are extremely pleased to reach an agreement with AT&T, which acknowledges the value of our intellectual property," said TiVo President and CEO Tom Rogers. "The combination of guaranteed payments and future additional fees paid to TiVo ... 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."

Under terms of the settlement, AT&T will pay TiVo an initial payment of $51 million, followed by recurring quarterly guaranteed payments through June 2018 of $164 million in total. Combined, the minimum full payout is $215 million, but AT&T will pay more if its own DVR subscriber base exceeds certain levels.

The settlement is somewhat reminiscent of a 2005 Microsoft antitrust settlement with RealNetworks. In that case, Microsoft agreed to pay its struggling competitor a whopping $760 million to settle claims that the software giant had abused its market power to harm RealNetworks. But the settlement has artificially kept RealNetworks going much longer than would have been otherwise possible. And one must think that with this week's settlement, TiVo—also struggling in a market it helped create—is getting a similar new lease on life.

TiVo's products used to be pretty innovative, but they were never wildly popular. Despite this, the company's name is often used as a verb (as in, I'm going to TiVo that show) even among people who don't own, and have never owned, a TiVo DVR.
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