Big payout to TIVo in DVR patent dispute, but, as usual, settlement ends in licensing agreement

AT&T and TiVo’s patent dispute over the latter’s digtal recording patent ended January 3 when the two parties settled. AT&T agreed to a whopping payout of $215 million over the next seven years to settle the dispute. But as is so common in patent litigation settlements, the two companies also agreed to enter into a cross license of their respective patent portfolios in the advanced television field, a release from TiVo said.  "We are extremely pleased to reach an agreement with AT&T, which acknowledges the value of our intellectual property," said Tom Rogers, CEO and President of TiVo. " The combination of guaranteed payments and future additional fees paid to TiVo in the event that AT&T's pay TV business continues to grow in-line with consensus analyst expectations, represents hard-earned compensation for our IP enforcement efforts. The settlement also provides us rights to innovate TiVo products and services under license from AT&T and allows us to avoid significant legal expenses that we expect would have been incurred by us during and after trial."

According to TiVo, AT&T will pay an initial $51 million upfront and $164 in quarterly payments thereafter. However, those quarterly payments could grow larger if its number of DVR subscribers exceeds a certain number of subscribers. TiVo first filed a lawsuit against AT&T in 2009 after accusing it of infringing on TiVo’s DVR patents.