Verizon ordered to pay $11M per month to keep FiOS VOD running

Michelle Clancy | 28-11-2011

In the latest development in an ongoing patent infringement case, Verizon has been ordered to pay $11 million+ in royalties per month to ActiveVideo in order to continue providing FiOS IPTV subscribers with video on demand (VOD) services.

Legal argument ruled that certain technologies that Verizon is using have been found to violate the patent holdings of the California-based ActiveVideo, which won a $115 million verdict in August in a jury trial. Now, three months later, that has ballooned to $139.1 million.
US District Judge Raymond Jackson in Norfolk, Va. has now ordered Verizon to pay $2.74 per FiOS television subscriber, beginning 1 December. Meanwhile, the telco incumbent has about six months--until 23 May, 2012--to find a workaround to ActiveVideo's technology or discontinue its VOD service.
The issue is a competitive one as well as an intellectual property issue. ActiveVideo licenses the technology in question to Verizon rival Cablevision Systems in New York, to power its CloudTV service.
"ActiveVideo thinks that if Verizon ceased infringing, Cablevisionís market share would increase and its subscriber base for CloudTV would also increase," Jackson wrote in his opinion in the case. "It is true that both parties will suffer hardship in this case, but the greater hardships lie with ActiveVideo."
Verizon, which will appeal the verdict, continues to maintain that it does not directly compete with ActiveVideo and therefore should be given no deadline for finding a workaround to the issue, which it says it has been working on since March.
Verizon has enjoted considerable success with FiOS TV, adding 131,000 new subscribers in the third quarter of 2011, bringing its total base to 4 million FiOS TV subscribers.