Tivo Picks A Patent Fight With Samsung
Sept. 11, 2015 (Mimesis Law) — As a sign of desperate times perhaps, the ex-beloved commercial-skipping DVR developer TiVo is once again back to its favorite federal district court (the Eastern District of Texas, of course) with a new filing alleging patent infringement of four different patents by Samsung. TiVo is by no means a stranger to patent battles. Almost twelve years ago, TiVo started its aggressive patent campaign against EchoStar in the lawsuit styled TiVo Inc. v. Echostar Communications Corp., et al., Case No. 2:04-cv-1-df (E.D. Tex.). That lawsuit proved to be very successful resulting in a jury verdict of $74 million in lost profits and reasonable royalties damages award and a permanent injunction enjoining Echostar from further infringement of the ‘389 patent. In a widely publicized opinion, the Federal Circuit affirmed the injunction and authorized additional damages to be awarded while the stay of the injunction was in effect. Despite of the permanent injunction, EchoStar decided to tweak their products and design around the ‘389 patent. That also proved to be unsuccessful, resulting in a sanctions ruling and nearly $90 million of additional damages (on top of the jury award) awarded for violation of the permanent injunction order, which were calculated at $2.25 per DVR subscriber per month. See TiVo Inc. v. Dish Network Corp., 655 F.Supp. 2d 661, 666 (E.D. Tex. 2009)
Finally, in April of 2011, EchoStar capitulated and ended up licensing the ‘389 patent for a whopping sum of $500 million on top of the $100 million it had already paid.
TiVo continued its campaign against Verizon, AT&T, Motorola Mobility, Time Warner (Motorola’s customer), General Instrument, Cisco and Google. The Arris (successor of Motorola), Cisco and Google cases resulted in large settlements in the amount of $490 million.
In today’s harsher environment for patent owners, especially with all the changes in damages law, those numbers are simply unreal and TiVo would be lucky to get a fraction of those amounts in its new case against Samsung.
This time around, TiVo’s U.S. Patent No. 6,233,389 is front and center in the Samsung complaint, even though it expires within approximately 3 years time. The technology behind the infamous ‘389 patent, entitled “Multimedia Time Warping System” allows television users to simultaneously record and play, rewind, fastforward, pause or replay television broadcasts using a digital video recorder (DVR). TiVo is also asserting that the infringement was willful due to TiVo’s notice of the patents on their website and Samsung’s actual or constructive knowledge of the asserted patents. The other three asserted patents are U.S. Patent Nos. 6,792,195 (expires January, 2018), 7,558,472 (expires in 2024) and 8,457,476 (expires in 2023).
The timing of this lawsuit is not surprising in view of TiVo’s struggling business performance (despite recent jump in subscriber numbers), with the licensing revenues from prior lawsuits having contributed a lot to its bottom line over the years. Looking over TiVo’s latest 8K filings, it’s clear that “Technology Revenues” from EchoStar, AT&T, Verizon, Cisco and Google/Motorola are the lifeline of TiVo’s business going forward with a huge patent cliff in 2019-2020.
|Technology Revenues||Cash Receipts|
|Fiscal Year Ended January 31,||(In thousands)|
|Six month period from February 1, 2015 to July 31, 2015||85,715||58,456|
|Technology Revenues||Cash Receipts|
|Six month period from August 1, 2015 – January 31, 2016||85,847||25,123|
|Fiscal Year Ending January 31,|
That is precisely why TiVo is attempting to extend its patent monopoly by bringing in a new licensee that will pay up by 2020 and beyond. It remains to be seen how successful their new campaign will be, but they may be in for a rude awakening as to the real “value” of their patented technology.
The Week(s) Ahead — Expected Events
The International Trade Commission Investigation (ITC) Hearing in the Cisco v. Arista case started September 9th and will go on until September 17th.
Disclosures and Disclaimers:
Nothing in this material is intended to constitute legal or investment advice of any kind, nor is any of this material based on any non-public information of any kind. In addition to my work at Markman Advisors, I am also a name partner at a NYC-based intellectual property litigation boutique firm, Kroub Silbersher & Kolmykov PLLC (www.kskiplaw.com). Markman Advisors is affiliated with a Houston-based investment management firm, Perdix Capital Management, which may have existing or potential positions relating to situations discussed in this material. Markman Advisors also provides consulting services to buy-side investors, including hedge funds and family offices, that may also have or enter into positions relating to situations discussed in this material. Questions or comments can be directed to me at email@example.com. All suggestions are welcome.