Verizon settles TiVo patent issue for $250.4M, eyes OTT service partnership

Michelle Clancy | 25-09-2012

TiVo has settled its patent litigation with Verizon FiOS for $250.4 million, while the two mull a partnership to distribute Verizon's new over-the-top (OTT) streaming joint venture with Redbox.

TiVo had accused Verizon of infringing on its patents for several DVR-related functionalities. Verizon has decided to settle, and will pay a $100 million initial cash payment, followed by recurring quarterly payments totaling an additional $150.4 million through July 2018. Verizon will also pay monthly license fees through July 2018 for each Verizon DVR subscriber in excess of certain pre-determined levels.

But TiVo also said that if the companies pursue "certain commercial initiatives" prior to December 21, 2012, it would credit up to $29.4 million of the payments made by Verizon back to the carrier. No word on exactly what those initiatives are but Verizon and TiVo did say that they are exploring future distribution of Internet video services developed through Verizon's joint venture with Redbox, dubbed Redbox Instant, by integrating the service into TiVo's retail DVR products.

As part of the settlement, TiVo and Verizon agreed to dismiss all pending litigation between the companies with prejudice. The parties also entered into a cross license of their respective patent portfolios in the advanced television field.

Redbox and Verizon's joint venture, Redbox Instant, will launch before the end of the year with a service that will go head-to-head against Netflix, Amazon and other online streamers. It will offer subscription video-on-demand (SVOD), an allocation of physical DVD rentals through Redbox's 40,000 kiosks and transactional rentals and purchases.