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TiVo Rises After Winning Key U.S. Patent Ruling Against Comcast

  • Comcast set-top boxes infringe Rovi patents, trade agency says
  • ITC ruling gives TiVo an edge in licensing negotiations

TiVo Corp. rose after it won a key patent-infringement case against Comcast Corp. that could give the digital-recording pioneer a legal advantage in a prolonged royalty fight over the recording technology.

TiVo rose 7.9 percent to $19.05 at 10:37 a.m. in New York trading Wednesday after rising as much as 10 percent.

Comcast and its suppliers infringe two patents owned by Rovi, now part of TiVo, related to interactive TV-programming guides that allow recording to be scheduled by a mobile phone, the International Trade Commission said late Tuesday.

The ITC issued an import ban for the X1 set-top boxes, and an order to halt sales of already imported products. That puts pressure on Comcast to reach a licensing deal with TiVo.

The decision “reinforces the need for Comcast to take the necessary licenses,” TiVo said in an emailed statement.

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. It 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.

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

Licensing Dispute

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.

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. An agreement could lift TiVo’s valuation by $6 a share, Cowen analyst Robert Stone wrote in note to clients.

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.

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).