Google, Cisco to pay TiVo in patent settlement

Cisco Systems and Google will give digital-video-recorder pioneer TiVo lump-sum payments totaling $490 million as part of a deal that will end the companies’ litigation over patents for set-top technology.

TiVo had been at odds with the two companies, as well as with Time Warner Cable and broadband device maker Arris Group, over the licensing of TiVo’s patents, including patents on its DVR technology. Under the settlement, which the companies agreed to on Thursday, all patent infringement claims will be dismissed.

Cisco will make a lump-sum payment of $294 million to TiVo and pay licensing fees in future years, Cisco said in a filing to the U.S. Securities and Exchange Commission on Friday. It will receive a perpetual license to the TiVo patents, and the two companies will enter into a limited cross-licensing agreement for video-related patents. Cisco and TiVo also agreed not to sue each other over patents for five years.

Google’s involvement in the case stems from its acquisition of Motorola Mobility, a deal that closed last May. In December, it sold Motorola’s set-top box business to Arris for $2.35 billion. Google was not able to confirm how much it would pay TiVo.

Cisco entered the set-top box business through its acquisition of Scientific Atlanta in 2006. Used as gateways to customers’ homes for service providers, these have become a key part of Cisco’s remaining consumer-focused business.

Cisco estimated the lump-sum payment would reduce its earnings per share by approximately $0.03 in the company’s fiscal fourth quarter, which ends in July. It doesn’t expect the future licensing payments to materially affect its results.

TiVo said Friday that it has won approximately $1.6 billion so far in awards and settlements over its intellectual property.

After TiVo accused Cisco of infringing its patents, Cisco sued the company last year seeking to invalidate the patents. Cisco alleged that TiVo had resisted granting a broad license to its technology, according to news reports at the time.

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