There is something deeply unseemly about Motorola suing TiVo on behalf of its customer Verizon. TiVo has spent years putting a software only version of its DVR implementation on a Motorola set top, in order for Motorola to stay in control at Comcast, as its lead DVR and set top provider. But when Motorola became the vendor of choice to provide both major US Telco’s with set tops tied in with Microsoft software, Comcast was heard to grumble that now that the Telcos had signed up for a software tie in, they could experience the high prices and vendor control which the cablecos had gone through courtesy of Motorola’s General Instrument acquisition.
Motorola was also the last vendor to arrive at a fully functioning DVR, and while companies like TiVo were out there spending their life’s blood on its creation, Motorola was dragging its heels and failing to introduce new technology into the pay TV equation. After all, it had a DRM lock-in which meant that the major Cablecos in the US had to buy from Motorola or Scientific Atlanta (now part of Cisco) anyway, so why bother to innovate.
It’s always the way, Motorola has trawled through patents it never knew it had, in order to find some new legal wrangle to try against TiVo, just to kill off a genuine innovator, or ensure that it ends up with less of a payout than it deserves.
It’s tactical, it’s brazen, it’s cynical, but in our opinion it will not work. So far TiVo has not come out and said that because it was dealing with its results release where it alluded to it briefly, but during the course of the next few days it will surely put something on its web site saying, ‘(Sigh).. yet another waste of our time but we will fight it in the courtroom, and win once again etc’ we have absolute confidence that our patents have withstood multiple attempts to invalidate them and have always won, blah, blah”
Both AT&T and now Verizon have pushed the onus for defense of their legal actions onto their suppliers, and the patents which have been raised once again are those filed in the mid to early 1990s by Edward Krause, who began life at General Instrument, left and formed Imedia, which was acquired by Terayon in 1999, which at that time was mostly making Cable Modems, and had no DVR in sight. In 2007 Motorola bought Terayon for unrelated technology. So all the phony rhetoric about infringing on its inventions are purely that, phony.
In fact if you read the patents they were made envisaging video tape as the preferred media, not a hard drive, although the potential for using a hard drive is mentioned as an aside. If you can simply successfully patent a ‘gist’ of an idea, we’d like to point out that one of the Faultline editors wrote a novel in 1990 which posited the idea of a machine which recorded live TV as it played, so perhaps we should have a patent for that. Hey, maybe all clamshell phones should pay the writers on Star Trek a royalty for them inventing that idea.
All of the Imedia patents listed are referenced as prior art in each of the patent cases which have be fought by TiVo, in particular the one against EchoStar and Dish, and each patent has been tested individually against the TiVo patents and TiVo has been found not to be infringing any of them and has survived two attempts to invalidate its own Time Warp patents using them. Perhaps Motorola thinks that by putting this particular group of three patents together they will somehow form a new patent that will stick.
Or to be really cynical, perhaps Motorola lawyers are just doing as little as they can to show Verizon that at least it tried. If Verizon has to pay royalties to TiVo, it will pay for that by taking it out of Motorola’s payments for FiOS set tops and DVRs, and since that’s a landmark contract worth 3 million devices over the past 5 years, Motorola is duty bound to chance its arm. But it’s nonsense. It has a past of working alongside TiVo, and it could negotiate a royalty for less money than the legal action will cost. Whatever happened to pragmatism in these issues?
If this dispute ends up in the hands of the International Trade Commission, pushed that way for speed of resolution, in the same way that Microsoft has pushed its own case against TiVo there back in January, we can see no reason why the ITC would not be punitive in its settlement of this case, and come down hard on Motorola and Verizon, as well as Microsoft and AT&T in the other case.
Microsoft in January called for an injunction to prevent TiVo importing DVRs, which it claims use patents which Microsoft has filed around the onscreen TV guide. Given that these patents have never been widely licensed and never (as far as we can find) seen legal scrutiny, they might be used to target any and every pay TV operator or supplier, but instead Microsoft is purely going after tiny TiVo, in a move that we think will be laughed at legally.
It’s the same for the Motorola patents. Why is it not suing Cisco, Technicolor, Pace, Samsung, Humax and NDS, to name but a few, who all build devices which are DVRs, if it truly believes that a company that it acquired by default, had invented the DVR. That’s because it does not believe this, and if a company doesn’t believe its own assertions, then we don’t believe that a court will take it too seriously.
Cisco is an interesting party in all this, since it justifies its failure to license patents from TiVo because it licensed some from Replay TV. TiVo’s first legal action was early in its career when it went up against Replay TV, prior to its bankruptcy and asset sale, and both decided not to pursue the case because they both may have run out of money, and if one of them won, the other would have had no cash to pay royalties, so at the time it was pointless.
Those patents were acquired by D&M Holdings, (once Denon and Marantz) which it then sold to DirecTV in 2007, where as far as we know, the assets remain. But the case with TiVo was never settled, instead being withdrawn, and it now has another few hundred DVR related patents to its name, so as TiVo continues to invest in more and more DVR concepts, DirecTV could still be nervous that it infringes some TiVo patents, which is perhaps why it has been so diligent in calling for TiVo’s help even after it officially kicked TiVo out of their long term DVR relationship in favor of NDS technology, and why in 2006 TiVo and DirecTV signed a three year extension to their agreement, along with a promise not to sue one another for patent infringement. DirecTV now has a leading whole home DVR which is bringing it a lot of plaudits and customer success, built around a DVR plus MoCA coaxial connectivity, which it launched in June last year.
Most of the US cable operators are now effectively covered by TiVo in one way or another, through software licensing or through a direct supplier relationship. TiVo has signed recent deals with Charter and Cox and RCN. Only Time Warner cable and Cablevision are outside of its ambit entirely, and that might be due to its suppliers using Replay TV licensing, which TiVo is perhaps not quite ready to take on legally.
In Europe TiVo has cut deals with Virgin in the UK, Canal Digital in Denmark, potentially a trial for all the Telenor Pay TV services across Scandinavia, as well as Ono in Spain. So really TiVo just needs to tie up the two major US Telcos and then look further and further abroad.
We have said before that the Microsoft ITC case is simply a new front in a determined effort by the pay TV community to avoid paying TiVo its due on patent licensing for Trick Play DVR features. Already the Dish Network has been ordered to pay around $400 million because it refused to pay a simple reasonable royalty over these patents, and although part of that is about to be reviewed by an ‘en banc’ retrial, the core issue that the patents are strong and valid, has been through courts twice now.
If the court cases run their course, discovery on the DVR patents will take almost no time because of all the work that has been done at the TiVo end, preparing for the EchoStar/Dish case. In both the Motorola and Microsoft cases against TiVo these are patents which are untried in a court of law, and would likely come to court years later after several attempts to get the patents revoked, which would probably succeed.