Under the agreement, TiVo will get a lump-sum payment of $490 million (EUR 370 million) from Google and Cisco. As part of the settlement, TiVo and Motorola, Cisco, and Time Warner Cable agreed to dismiss all pending litigation between the companies. TiVo will recognise a portion of the payment as past damages during the second quarter and the remainder over time.
Shares of TiVo were sharply lower Friday morning after the the announcement, as the payment was much lower than investors had previously anticipated. To cushion the blow, TiVo said it would increase its stock repurchase program to $200 million, double the current amount. The settlement averts a trial between the technology companies, scheduled to take place in the next two weeks.
The company will also enter into patent licensing deals with Cisco, Google and Arris Group. Google bought Motorola Mobility in 2012 and sold its set-top making unit to Arris this year.
Motorola Mobility is “pleased that all parties involved have reached an agreement to resolve pending litigation,” said a Motorola spokesman.
“We are pleased to reach an agreement that brings our pending litigation to an end and further underscores the significant value our distribution partners derive from TiVo’s technological innovations and our shareholders derive from our investments in protecting TiVo’s intellectual property,” said Tom Rogers, CEO and President of TiVo.
A series of law suits have dogged TiVo for the past nine years. The Motorola action was the responsibility of Google, which acquired Motorola Mobility, protecting Arris from potential liability before its purchase of the Motorola Home division in April. An upper limit of $50 million liability has been placed any loss to TiVo through the action.
The new agreement brings the total from awards and settlements related to the use of certain TiVo intellectual property to roughly $1.6 billion.