ott revenueWith two announcements today of patent litigation settlements, Verizon is on the hook for over half of one billion dollars in licensing fees for their video product. Verizon agreed to a $250 million patent licensing deal with TiVo and settled on a $260 million ActiveVideo patent infringement claim. The dollar numbers will probably increase, as they include additional licensing fee payments by Verizon.

Verizon TiVo Settlement
Verizon has agreed to pay TiVo $250 million, with an initial $100 million cash payment, for “…mutual patent licensing arrangement.” Verizon will make up the remaining $150 million in quarterly payments through July 2018. There may be additional licensing payments to TiVo if Verizon DVR subscriber counts exceed certain pre-determined levels.

TiVo and Verizon have also agreed to explore expanding their relationship to potentially include Verizon’s upcoming OTT product being developed in partnership with Redbox. “In addition to the cash payments described above, Verizon and TiVo are exploring, among other things, future distribution of Internet video services developed through Verizon’s joint venture with Redbox by making content distributed via that service part of the diverse selection of linear and broadband-delivered content accessible to users of TiVo’s retail DVR products,” TiVo announced in a press release.

It’s been a long time coming for TiVo, but it appears their patent litigation strategy is paying off. They already have a $600 million settlement with DISH Networks and another $300 million settlement deal with AT&T. They still have pending patent based lawsuits with Time Warner Cable, Google (by way of Motorola Mobility), and Cisco.

Verizon AciveVideo Settlement
The ActiveVideo settlement comes after a long and contentious battle over patent protected interactive TV and video-on-demand (VoD) technologies. ActiveVideo had won an initial suit and a recent appeal, but Verizon continued to fight – until today when ActiveVideo announced the settlement.

“While the terms of the agreement are confidential, we can confirm that the parties agreed to cross-license their patents, agreed not to sue each other for a period of years, and Verizon agreed to pay the $260 million previously ordered by the district court and an additional unspecified amount of money. In the end our technology and its value have been recognized,” said Jeff Miller, president and CEO of ActiveVideo Networks in a press release.

So was it cheaper for Verizon to “borrow” this technology for a while and then be forced to pay licensing for it, than to develop similar technology on their own?