After a four-year battle against Comcast Corp., DVR tech creator TiVo Corp. won an appeals court ruling on one of its patents in March 2020. This win may help in its ongoing fight over two more patent royalties. But is DVR technology, which is rapidly becoming obsolete, really worth fighting for?
Is it Worth the Fight?
When DVR technology first came out, it was groundbreaking. It killed VCRs and any other type of recording and changed the dynamic by which people digested their television. It was a rapid adoption of a brand new technology.
At first, DVRs were standalone (i.e. the original TiVo boxes). Then, they were built into every cable set-top box. But now, as we stream more and more of our content and pay for subscriptions to Netflix, Hulu, Amazon TV, and more, many may wonder why these tech companies are arguing over an almost-obsolete technology that’s quickly going out of fashion.
Most of us in the “technology-aware realm” are cord-cutters and stream everything. We don’t really do DVRs anymore. However, the vast majority of the country still gets their television through a cable box. Plus, live sports (if that ever happens again) still relies heavily on broadcast television, and requires some form of recording for delayed/on-demand viewing.
Many people still haven’t cut the cord. They want to be able to record the news or live sports so they can watch it later. I think it is becoming an obsolete technology, but it’s still a powerful force out there and likely drives a continued revenue stream for companies who control that technology. Also, think about that large swath of rural America that doesn’t have access to super-fast internet, and older communities that aren’t as tech-savvy.
TiVo and the DVR technology became ubiquitous. Every cable provider includes a DVR as an option in the cable box they give you. Even though you’re not buying it by itself, it still contains technology that someone is buying and passing onto you in their costs.
Related: We’re Not Just Your Outside Law Firm. We’re Your Chief IP Officer
Reasons to Fight
Many people just like to sit down with their remote control, click through the channels, and be able to record and view later all the episodes of whatever they’re watching. I think that might be one of the reasons this case is still being fought. There’s still a big market out there for DVRs – or at least the technology and functionality that is embedded in them.
TiVo is the plaintiff here, trying to reap the benefits of what is their original technology. Even now that it’s kind of ubiquitous, and seemingly lots of companies are using the technology, it’s still worth money. They might not be trying to get DVR customers on their own anymore, but the revenue train for DVR technology is undoubtedly still out there. I don’t think it’s a nominal amount at stake.
The threshold for when to stop litigating a patent is most commonly when it is no longer financially beneficial for you to do so. Also, the patent laws provide for a 6 year statute of limitations. This allows you to go back six years for damages, even after the patent has expired. Those prior six years might contain billions of dollars worth of sales and you can still collect revenue in a lawsuit based on those prior sales.
In the TiVo vs. Comcast case, we’re talking about technology that’s become so ubiquitous that there are still very, very large volumes of sales, both in terms of numbers and dollars. There are certainly lots of cases that we deal with where companies are like, “why should we even bother patenting this? We know the technology is going to change in three years.” But here, with the benefit of hindsight and a 20-year patent, it is still likely a winning scenario for TiVo to keep pushing the case.
Patent Aggregation and the Tech Sector
Things have shifted for the smaller companies that might not normally invest heavily in protecting their technology through the patent system. Because of patent aggregation firms, there is now value in applying for patents on technology that might be obsolete in a few years or that you might not commercially pursue on your own.
These firms buy patents from small businesses, keep them, and litigate them where they can take a cut of the recovery. No matter how small the technology, or how likely it is to be obsolete in a few years, these patents can now be monetized providing a potential revenue source for companies outside their true core competencies.
Many companies don’t realize that there is not a requirement to produce and sell your invention (a so-called ‘working requirement’) in the US patent laws. I can come up with an inventive idea, patent it, but never build it or commercialize it. If someone else does five years later and sells a billion of them, I now have the right to sue them. That’s what patent aggregation companies such as Fortress Investment Group are doing. They’re aggregating all the patents and then trying to monetize them through the litigation system.
Related: Fortress Investment Group: Bad Actor, Bad Timing, or Both?
Where are TiVo and Comcast Now?
Now, Comcast is not allowed to import its set-top boxes into the US. The import ban was issued by the US International Trade Commission and was affirmed in March by the US Court of Appeals for the Federal Circuit.
In June, the Supreme Court denied a petition by Comcast to review the import ban on the case.
TiVo is currently seeking further orders to limit imports of Comcast set-top boxes based on other TiVo patents.
“We understand the value of our patented technology and why Comcast has relied on it heavily since launching its X1 platform,” Arvin Patel, TiVo’s chief intellectual property officer, noted in a public statement. “We are hopeful today’s announcement will encourage Comcast to put their customers first and license our IP just as the other top nine US pay-TV providers do.”
The patents being disputed in the ongoing cases are centered around remote access to program guide functions in set-top boxes made by Commscope Holding Co.’s Arris International and Technicolor SA for Comcast.
We are currently waiting on two more court decisions to come out. We will keep you updated on our blog.