Tivo has won at least round one of two patent cases it has going against Comcast, and its Xfinity set top boxes. It has a NY Court patent abuse case, but this ITC complaint which is almost identical, had the additional power of blocking the import of Xfinity X1 set top boxes, and it has delivered on that.
All of this relates to the traditional TV guide patents which TiVo inherited from Gemstar, and which came via the Rovi half of the merger to form the new TiVo last year. The likely outcome is that Comcast will have to step away from this particular attempt to get out of the long standing patent agreements it has had with TiVo, and re-sign a license, in order to have an easy life.
Right now Comcast is also providing the X1 design to Videotron, Shaw and Rogers in Canada, and while this import ban should not extend to Canada, it will certainly put some doubts in their minds about also licensing the TiVo technology.
Shaw has renewed its patent agreements with TiVo as recently at 2015, but both Videotron and Rogers have deals which may be about to expire, signed in 2011 and which many not include all the required technology.
Comcast has taken the displeasure at being sued for a license renewal really seriously and has used it to kick out TiVo from being its principle metadata vendor in favor of Gracenote, now a subsidiary of Nielsen. While Gracenote may have said this is because it offers a superior service, financial analysts have called it tit-to-tat, in the manner of Apple. Last week Apple did much the same to Qualcomm, suggesting that it was looking for a way to eliminate all Qualcomm products from its devices in the future, just because it cannot get the terms it wants for Qualcomm patent licenses.
TiVo for its part has consistently said that it has 8 out of the top 9 pay TV companies as licensees in the US, and expects that Comcast will sign at some point. Comcast says it will appeal, but it will first have to get a stay on the non-importation ruling from the ITC, until an appeal can be heard, and we think that’s unlikely.
Outside of the US, the Guide patents have been seen by some Courts (UK and Netherlands) as “obvious” and unable to be patented, but US courts have traditionally taken a different view.
Comcast says it has alternative designs which do not infringe the patents, but in the past that has simply led to larger fines (Dish did this with the original DVR patents from TiVo and got punished quite badly for it.
Chances are that Comcast will settle, and barter for a lower licensee price in return for promises of renewed usage of TiVo products, and make the deal pending the appeal. This is perhaps the moment that TiVo has to play hardball and accept only a deal that assures its long term revenues.
When the case first came to light in April 2016 the TiVo share price fell 14% of the day, and on this news it is up around 10.5% on pre-market trading, with perhaps some more to go.