January 3, 2012 / 10:54 PM / 7 years ago

AT&T to pay TiVo to settle patent dispute

(Reuters) - AT&T Inc has agreed to pay TiVo Inc

a minimum of $215 million and additional monthly licensing fees to settle a patent infringement dispute, sending shares in TiVo up 15 percent in afterhours trade.

The settlement is the second big win in recent months for video-recording technology pioneer TiVo, which expects fees from AT&T to “significantly exceed” the guaranteed minimum payment.

TiVo also prevailed in a similar case against Dish Network

and Echostar Corp in May.

TiVo, whose brand is synonymous with a digital video recorders, has turned to litigation to generate revenue from licensing fees as it has struggled to fight a massive influx of competition from low-cost rivals in recent years.

AT&T’s first payment of $51 million, which was due Tuesday is slightly higher TiVo’s forecast for its fiscal fourth quarter revenue of $48 million to $50 million, announced in November.

The first monthly payment will be followed by quarterly payments through June 2018, according to TiVo.

TiVo said it expects the payments will rise well beyond the minimum fee laid out as it will require incremental monthly subscriber fees if AT&T’s subscriber numbers exceed certain pre-determined levels which the companies did not disclose.

In return the companies have agreed to dismiss all pending litigation and enter a cross licensing agreement.

In their settlement, announced in May, Dish and Echostar, both controlled by Charlie Ergen agreed to pay TiVo $500 million to settle their patent infringement dispute.

TiVo share rose to $10.25 in afterhours trade after closing in regular trading at $8.92.

The lawsuit was TiVo v AT&T in the U.S. District Court, Eastern District of Texas, no. 2:09-CV-00259.

(Reporting by Sinead Carew)

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