A patent lawsuit involving TiVo Inc and other businesses including Motorola Mobility, recently settled just days before the case was set to go to trial. As a part of the settlement TiVo will receive $490 million. The amount reached in the settlement was a surprise to many who believed that the amount would be much higher. One analyst previously indicated that he thought the settlement would be somewhere in the neighborhood of $1.7 billion.
The root of the lawsuit was actually a claim filed by Motorola (which is owned by Google), against TiVo. The claim alleged that TiVo had infringed Motorola’s patents for digital video recorders. In response to that claim TiVo countersued. As a part of the settlement it will reportedly license the use of its patent to several companies including Motorola’s owner Google.
The market did not receive the low settlement offer well. As a result of shareholder disappointment, its shares dropped 20 percent.
This settlement agreement is the latest Motorola has been involved in over the course of the last few years. It has found success in generating revenue via litigation with its competition through the establishment of licensing agreements. Establishing such agreements can be complicated as many issues need to be addressed. When done correctly they can provide businesses of all sizes a good source of revenue for the period of time the contract covers.
Though often an effective tool, lawsuits are not a prerequisite of establishing a licensing agreement with another business. For the best result however, the assistance of a business lawyer is.
Source: Reuters, “TiVo’s $490 million patent settlement not enough for shareholders,” June 7, 2013