Analysts who have suggested that the TiVo AT&T actions would just fade away into a patent swap, after Microsoft intervened with its own patent action against TiVo this week, we feel are wide of the mark.
TiVo has a long history of defending its basic intellectual property around digital video recorders, and has had the patents deeply examined in courtrooms and at Markman hearings, and it has been found that they are sustainable. Instead this is a merely an attempt, and a not too subtle one at that, at mitigation.
It is customary for a company as large as Microsoft, and for one as large as AT&T, each with extensive patent hoards of their own, to find a patent that its believes its opponent has used illicitly and barter the two, one against the other. It mostly slows down the rate of the court case as they try to get the two heard together or simply settle out of court for no payment or more likely a lesser payment.
But the patents that Microsoft has raised are to do with an onscreen TV guide, they are nothing to do with the trickplay and other patents that TiVo is suing both AT&T and Verizon for, and with which it was so successful in using in its case against EchoStar, which eventually yielded it $400 million.
That means that the AT&T case can go ahead, irrespective of what happens in the Microsoft case. So can the Verizon case, and because the two patents are in unrelated areas of technology there is no reason to have them both heard in the same court at the same time. Discovery on the DVR patents will be shorter, because of all the work that has been done at the TiVo end, preparing for the EchoStar case. In the Microsoft case against TiVo these are patents that are untried in a court of law, and would likely come to court years later.
TiVo invented DVR technology and since then everyone has copied it unashamedly. That is not the case with EPGs. They were invented by Gemstar, now operating as Rovi, and have been widely licensed by broadcasters, operators and TV technology providers. So it’s unlikely that anything TiVo uses cannot be licensed from Rovi, even if it meant changing its implementation slightly. We’re not really sure that the Microsoft patents would ever get past first base in being sustainable in the face of legal scrutiny.
Microsoft has not specifically licensed that part of its technology, on its own, to anyone that we know of. It has licensed much of its set top designs to chip makers and it may have been included in set tops, but it would be hard for a court to calculate what value the patents have on their own, and just as hard for negotiators to allocate them any value at all.
TiVo naturally came out all guns blazing over the Microsoft assertions saying, ‘Microsoft’s recent legal actions, including its decision to seek to intervene on behalf of its customer, AT&T, and its recent complaint against TiVo in US District Court, Northern District of California, do not bear on whether the AT&T products and services that are the subject of TiVo’s complaint infringe the patents asserted by TiVo. Rather these actions are part of a legal strategy to defend AT&T. We remain confident in our position that AT&T will be found to infringe on the TiVo patents asserted.”
This is not all altruism by Microsoft, since as the technology supplier to AT&T with its Mediaroom suite of software and hardware, it is just as likely to have damages awarded against it in court if TiVo goes down that route. So far TiVo has purely hit out at operators, and has managed 100% success so far, despite being the far smaller company.
One way or another Microsoft would end up paying any fines that are granted against AT&T, even if it was simply through device and service discounts going forwards, by way of compensation. Microsoft or set top suppliers Motorola and Cisco, or both, would also likely have to pay royalties in future directly to TiVo if AT&T lost its case.
Yes we expect a settlement, and after this lame move from Microsoft, we would expect it settled sooner rather than later in TiVo’s favor, but at least a settlement would avoid all of the damaging publicity and the effect this would have on Mediaroom sales around the world.