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Verizon Settles Patent Spat With ActiveVideo

9/24/2012 7:24 AM Eastern
Verizon Communications will pay $260 million to ActiveVideo Networks -- plus an unspecified additional amount -- to settle the interactive TV vendor’s patent litigation.
Separately Monday, TiVo announced it had reached an out-of-court settlement with Verizon, under which the telco will pay at least $250 million over the next six years to settle the DVR company’s patent lawsuit. TiVo has also won settlements from Dish Network and AT&T.
In the ActiveVideo case, the U.S. Court of Appeals for the Federal Circuit in August upheld a decision ordering Verizon to pay damages of at least $260 million to ActiveVideo, whose largest customer is Cablevision Systems.
“After the Federal Circuit’s decision affirming the validity of our patents and the jury verdict against Verizon, we are happy to announce that ActiveVideo has settled the dispute with Verizon,” ActiveVideo president and CEO Jeff Miller said in announcing the deal. “In the end our technology and its value have been recognized.”
Terms of the agreement between Verizon and ActiveVideo are confidential. Miller said the companies agreed to cross-license their patents and to not sue each other for a period of years. 
“We are pleased to have reached a settlement with ActiveVideo in this matter,” Verizon spokesman Ed McFadden said in an emailed statement.
The three-judge panel for the U.S. Court of Appeals for the Federal Circuit ruled partly in Verizon's favor by reversing a lower court's permanent injunction barring the telco from employing the ActiveVideo patents. The appeals court also reversed the district court's judgment of infringement against Verizon on one of ActiveVideo's patents while affirming that the telco infringed three others.
But the Court of Appeals upheld the damages awarded to ActiveVideo in full and also affirmed the district court's imposition of a sunset royalty.
ActiveVideo sued Verizon in May 2010 over patents covering interactive TV and video-on-demand. That came after Verizon had sued Cablevision and brought a complaint before the U.S. International Trade Commission, alleging the MSO violated several telco-owned patents. The ITC last fall rejected Verizon's claims.
After a three-week trial in 2011, a federal jury in Virginia found Verizon's FiOS TV violated four ActiveVideo patents and awarded ActiveVideo $115 million in damages. The jury also found that ActiveVideo infringed two Verizon patents.
The U.S. District Court for the Eastern District of Virginia had found Verizon violated four ActiveVideo patents: U.S. Patent Nos. 6,034,678, "Cable Television System With Remote Interactive Processor"; 5,550,578, "Interactive And Conventional Television Information System"; 6,100,883, "Home Interface Controller for Providing Interactive Cable Television"; and 6,205,582, "Interactive Cable Television System With Frame Server."
In its August ruling, the appeals court overturned the infringement ruling on the '582 patent. But it affirmed the full damages award because "Verizon has not argued either before the district court or on appeal that a finding of non-infringement of the '582 patent should result in a reduction of damages."
According to ActiveVideo, it first contacted Verizon in 2005 seeking to reach an agreement to deploy its interactive TV solution on the FiOS network. The telco previously asserted in court documents that at the time, it had already selected SeaChange International as its primary VOD systems vendor when ActiveVideo came calling. Verizon has since switched to Cisco Systems as its VOD vendor for FiOS TV.
San Jose, Calif.-based ActiveVideo says its CloudTV platform is deployed in more than 10 million homes with Cablevision Systems, Oceanic Time Warner Cable in Hawaii and other operators, as well as on Philips-brand Internet TVs.
ActiveVideo also recently announced a deal with Ziggo, the largest MSO in The Netherlands, and the company developed an advanced VOD menu for Comcast that the MSO is testing in its Chattanooga, Tenn., system.
 
September