Comcast Wins New Round in TiVo Fight Over TV Remote Features

(Bloomberg) -- Comcast Corp. notched another win in its fight with TiVo Corp. over the technology in set-top boxes and remote controls that lets you find, view and record television shows, but it’s still unclear which company will ultimately prevail in the long-running battle over patents.

The U.S. Patent and Trademark Office on Tuesday said a TiVo patent for a way to watch a show while viewing schedule information for other programs shouldn’t have been issued. It was the last of more than 40 reviews Comcast sought with the agency to challenge TiVo patents for features that cable-viewers have become accustomed to.

Comcast had paid TiVo for a decade to access features such as voice-activated searches or using a smartphone app to record shows. When the two sides were unable to agree on a contract renewal, it led to patent disputes primarily in New York and the U.S. International Trade Commission in Washington and shows no sign of ending.

“This could last a long time,” said Eric Wold, an analyst with B. Riley FBR who has a “buy” rating on TiVo. “It seems like Comcast is really willing to go the distance on this.”

Eight Challenges

While TiVo has been focused on the courts and trade agency, Comcast has been pursuing its cases in the patent office, where it’s easier, faster and cheaper to get a patent invalidated, filing dozens of cases against patents owned by TiVo’s Rovi and Veveo units. In the cases decided Tuesday, Comcast had filed eight challenges to a single patent.

Comcast has managed to get invalidity decisions at the patent office on a dozen TiVo patents, the bulk of the ones that were lodged in the first round of litigation.

“We’re pleased with the patent office’s latest ruling, which invalidates the final Rovi patent under review by the patent office,” Comcast said in a statement. “By invalidating all 12 of the Rovi patents, these rulings further support the fact that Comcast engineers independently created our X1 products and services.”

The cable company is likely to file challenges over patents in newer cases that TiVo filed earlier this year, though changes in the review process at the agency could make it harder to win.

‘Corporate Behemoth’

TiVo Chief Executive Raghu Rau said in an Oct. 31 column that the issue is that “a corporate behemoth with endless cash reserves refuses to pay to use the patented technology of others and instead files an unprecedented number of challenges, appeals, and counterclaims.”

Comcast is playing hardball. TiVo won an import ban from the ITC on certain Comcast set-top boxes, only to have the cable company remove the feature at the heart of that case, for remote recording. The patent office has said the patents in that case are invalid. The ultimate decision, in these and other cases, will be with the U.S. Court of Appeals for the Federal Circuit in Washington, the nation’s top patent court.

“The broader dynamics in this dispute are not impacted at all by today’s decision,” TiVo said in a statement, citing the ITC case and pending district court cases. “These cases will likely cause Comcast to have to defeature their product further.”

Rau said Comcast customers deserve a cut in their rates for all the features that will be removed if Comcast won’t license TiVo’s technology. Comcast has said the one feature it did delete was only used by 1 percent of customers.

Comcast, which reported $85 billion in sales last year including almost $53 billion from cable, can afford to play a waiting game. Wold estimated that the worst case payment from Comcast would be $55 million a year.

Licensing Deals

Some of the TiVo patents are reaching the end of their lifespan and the company’s stock is down 24 percent this year as the fight has slogged on and investors worry that it could affect licensing deals with other companies.

TiVo, which gets about half of its $827 million in revenue from licensing, has said it is “exploring a range of strategic alternatives” that may result in a sale of all or part of the company. The company is expected to provide an update of its plan when it announces earnings Wednesday.

“I’m sure TiVo would be willing to take a lesser amount from Comcast to avoid having to pay litigation costs every year,” Wold said. In the meantime, Comcast is saying “let’s do the most harm we can.”

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