MUMBAI: Tivo which develops digital video recorders in the US has settled its pending patent litigation with Motorola (now owned by Google and Arris), Cisco and Time Warner Cable. This way the parties have avoided going to trial.
Tivo has agreed to enter into certain patent licensing arrangements with Arris, Cisco, and Google. As part of the settlement, Google and Cisco will pay Tivo an upfront lump-sum payment of $490 million, bringing the total from awards and settlements related to the use of certain Tivo intellectual property to roughly $1.6 billion.
In February 2011, Motorola had accused Tivo of infringing on its patents for digital video recorders. Tivo then filed a counter-suit in March 2012.
Tivo CEO and president Tom Rogers said, "We are pleased to reach an agreement that brings our pending litigation to an end and further underscores the significant value our distribution partners derive from TiVo‘s technological innovations and our shareholders derive from our investments in protecting TiVo‘s intellectual property."
"Further, this settlement significantly enhances our already strong balance sheet, bringing our cash position to over $1 billion before inclusion of future expected payments of at least $400 million from prior settlements. We intend to use our significant capital resources to drive shareholder value, including more aggressively returning capital to shareholders under our newly increased share repurchase authorisation and we will be increasing the size of our 10B5-1 trading plan as soon as permissible," he added.
"Importantly, we just recently closed one of our best quarters ever in terms of subscription growth, driven by a number of our existing operator deals in the US and abroad that are now fully up and running. As a result, we delivered our highest gross margin ever and solid MSO revenue growth of 98 per cent year-over-year, and we expect this MSO revenue growth will continue as we roll out additional deployments. So, as we look out beyond today‘s important settlement we believe our core operating business will continue to drive growth to both the top and bottom line."
As part of the settlement, TiVo and Motorola, Cisco, and Time Warner Cable agreed to dismiss all pending litigation between the companies. Tivo will recognise a portion of the payment as past damages during the second quarter and the remainder over time. The company intends to provide additional details regarding the timing of revenue recognition in its second quarter fiscal year 2014 earnings report. Further, as a result of this settlement, TiVo expects net income and Adjusted EBITDA to benefit from lower litigation spend in the remainder of its fiscal year ending 31 January 2014 and beyond.
