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TiVo Wins Patent Case Against Comcast at U.S. Trade Agency

TiVo Wins Patent Case Against Comcast at U.S. Trade Agency

(Bloomberg) -- TiVo Corp. won a key patent-infringement case against Comcast Corp. as the digital-recording pioneer strives for legal advantage in a prolonged royalty fight over the recording technology.

In reaching the decision, the U.S. International Trade Commission issued an import ban on the X1 television set-top boxes used by Comcast. The import ban, and an order to halt sales of already imported products, would go into effect in 60 days unless it’s overturned by the administration of President Donald Trump. Historically, that rarely happens. Comcast can also challenge the commission’s decision in an appeals court that specializes in U.S. patent law.

TiVo rose as much as 12 percent on the news.

Comcast’s set-top boxes infringe two TiVo patents, the ITC said in a notice posted on its website. The import ban applies to the X1 set-top boxes, but not any Legacy models. The commission said it was too hypothetical at this stage to determine whether two alternative designs still infringe the patents.

“Today’s commission opinion reinforces the need for Comcast to take the necessary licenses,” TiVo said in an emailed statement.

Comcast said it was reviewing the ruling, which will be made public after both sides get a chance to redact confidential information.

The dispute began when Rovi Corp., which merged with TiVo last year, and Comcast were unable to renew a patent-licensing agreement over the technology in television set-top boxes. Arris International Plc and Technicolor SA, which make the boxes for Comcast in Mexico and in Asia, also were named in the trade complaint. 

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TiVo, which closed at $17.65 during regular trading, rose to as much as $19.75 following the release of the ITC notice.

A settlement with Comcast on this and other patent disputes could bring in $15 million in quarterly revenue for TiVo, according to a report by Bloomberg Intelligence analyst Matt Larson.

The dispute also is a key test of TiVo’s business strategy. The combined company relies on licensing revenue from its trove of some 6,000 issued and pending patents worldwide related to programming guides and other TV-watching technology.

TiVo has said the move toward more video services through internet devices, streaming media and mobile electronics are key to the future of its licensing program. Investors are wary and have driven the stock down this year while the broader stock market rises.

The two patents the judge found to be infringed relate to interactive TV-programming guides that allow recording to be scheduled by a mobile phone. Four other TiVo patents, on ways to record programs and access information in homes with multiple televisions, were found not to be infringed by Comcast.

While TiVo is pursuing patent-infringement claims, Comcast is seeking to cancel the patents through a review at the U.S. Patent and Trademark Office, where it’s easier to invalidate patents than in a court. Those cases run parallel to ITC and court proceedings. Final decisions at the patent office are expected in about a year.

The case is: In the Matter of Certain Digital Video Receivers and Hardware and Software Components, 337-1001, U.S. International Trade Commission (Washington).

To contact the reporter on this story: Susan Decker in Washington at sdecker1@bloomberg.net.

To contact the editors responsible for this story: Jon Morgan at jmorgan97@bloomberg.net, Mark Drajem, C. Thompson

©2017 Bloomberg L.P.